Weekly Finance Interview Question Challenge #7 (2021 New)

[@algierlagapa8782]

Really helpful. Thank you!

[@FinanceableTraining]

Glad you found it helpful. Please let us know if you have any questions!

[@ZurvanMaster]

Hi, correct me if I'm wrong but isn't the cost of debt 4% instead of 5% here? The interest rate paid on debt is 5%, but the cost of debt would then be (interest rate)*(1 - tax rate) = 0.05*(1-2/10) = 0.05*0.8 = 4%. Please tell me if I'm missing something here.

[@Jimmy-jd9eh]

Yeah that is the after tax cost of debt - if not specified can be both I think. But for cost of capital calculation certainly after tax