The aftertax cost of debt: varies inversely to changes in market interest rates. will generally exceed...

The aftertax cost of debt:

varies inversely to changes in market interest rates.
will generally exceed the cost of equity if the relevant tax rate is zero.
will generally equal the cost of preferred if the tax rate is zero.
is unaffected by changes in the market rate of interest.
is highly dependent upon a company's tax rate.

Expert Solution

is highly dependent upon a company's tax rate

The after-tax cost of debt is is highly dependent upon a company's tax rate because after tax cost of debt equal to cost of debt (1-tax rate).

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jeff jeffy answered 2 years ago

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