What is after tax cost of debt

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As chief financial officer (CFO) of Madison Corp. you observed the price at which your bonds are selling in the market, the coupon on your bonds, and the credit rating on your debt. From this information you determine that your pretax cost of debt in 8.5%, the coupon rate is 9.5%, and the credit rating has improved from an A rating to a AA rating. In addition, Madison is in the 28% tax bracket. What is Madison’s after tax cost of debt (round at 2 decimal places – such as 1.45%)

Reference no: EM131303988

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