Principles of Managerial Finance
Principles of Managerial Finance
17th Edition
ISBN: 9781323419656
Author: Gitman
Publisher: PEARSON
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Chapter 9.2, Problem 9.6RQ
Summary Introduction

To discuss:

Methods used to find the before-tax cost of debt.

Introduction:

The before tax cost of debt is defined as the rate of return the firm must pay on new borrowing. If a firm has zero floatation costs, then the firm’s before-tax cost of debt would be equal to required rate of return by the bondholders.

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Principles of Managerial Finance

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