to the company is 40%. Determine the cost of capital after tax assuming the debt is issued (i) at par, (ii) at 10% discount, and (iii) at 10% premium.

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Question 1. X Ltd has 8% perpetual debt of 20,00,000. The tax applicable
to the company is 40%. Determine the cost of capital after tax assuming the debt is
issued (i) at par, (ii) at 10% discount, and (iii) at 10% premium.
Transcribed Image Text:Question 1. X Ltd has 8% perpetual debt of 20,00,000. The tax applicable to the company is 40%. Determine the cost of capital after tax assuming the debt is issued (i) at par, (ii) at 10% discount, and (iii) at 10% premium.
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