Accredited In Business Valuation (ABV) Exam

Which of the following is the correct formula for the after-tax cost of debt in a WACC calculation?

Kd = (Interest Expense / Total Assets) × Tax Rate Kd = Pre-tax yield × (1 – Marginal Tax Rate) Kd = Risk-Free Rate + Credit Spread – Tax Rate Kd = Bond coupon rate / Book value of debt

Correct Answer:

Kd = Pre-tax yield × (1 – Marginal Tax Rate)

Access more questions from this quiz

Continue to Accredited in Business Valuation (ABV) Exam for more practice questions and the full quiz experience.

Access More Questions