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    Jetro Juanta
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    Mountaineer Airline Company is considering issuing new debt at an interest rate of 8%. With Mountaineer's marginal tax rate of 39%, the after-tax cost of debt would be 4.88%.

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    Mountaineer Airline Company is considering issuing new debt at an interest rate of 8%. With Mountaineer's marginal tax rate of 39%, the after-tax cost of debt would be 4.88%.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    6 views1 page

    CCP2

    Uploaded by

    Jetro Juanta
    Mountaineer Airline Company is considering issuing new debt at an interest rate of 8%. With Mountaineer's marginal tax rate of 39%, the after-tax cost of debt would be 4.88%.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    The Mountaineer Airline Company has consulted with its investment bankers and determined

    that they could issue new debt with a yield of 8%. If Mountaineer ' marginal tax rate is 39%,

    what is the after-tax cost of debt to Mountaineer?

    rd

    *= 0.08 (1 – 0.39) = 0.0488 or 4.88%

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