[lindjlny]

I’m in the middle of studying for BEC and I can’t seem to understand some questions relating to the cost of debt. If i see a tax rate in the question I usually compute the after tax cost of debt. For example, if the Tax Rate is .40 and the Cost of Debt .10 then the actual cost of debt should be .06 or (1-.40) x .10=.06. Does anybody know why becker uses the Cost of Debt of .10 rather than computing the after tax cost of debt in some questions (even when there is a tax rate provided in the question)? Any help would be greatly appreciated.

[Anonymous]

I honestly don't know the answer to this question, but I wanted to bump the thread for you. I'll see what I can find out about it and post later on today.

[Anonymous]

@lindjlny can you refer to a specific mcq or a page number? I have noticed something similar while studying and realized that sometimes they give you an after tax number and other times they ask for before tax#..

[lindjlny]

I can't recall one know, but i'll be reviewing that section this weekend…i'll post it if i run into it

[Author]

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