The outstanding debt of Home Depot trades with a yield to maturity of 10%. The tax rate of Home Depot is 30%. What is the effective cost of debt of Home Depot? A) 8.05% B) 10% C) 7% D) 7.35%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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Financial Accounting

The outstanding debt of Home Depot trades with a yield
to maturity of 10%. The tax rate of Home Depot is 30%.
What is the effective cost of debt of Home Depot?
A) 8.05%
B) 10%
C) 7%
D) 7.35%
Transcribed Image Text:The outstanding debt of Home Depot trades with a yield to maturity of 10%. The tax rate of Home Depot is 30%. What is the effective cost of debt of Home Depot? A) 8.05% B) 10% C) 7% D) 7.35%
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