What is average and marginal tax rate?

Cost of equity 16 before tax cost of debt 13 marginal tax rate 40 stock sells at book value what is the after tax weighted average cost of capital?

  • Answer:

    I have just started taking finance class in college. I found the formula to this equation on wikipedia. Did i win anything? After tax cost of debt formula before tax rate x (1 - marginal tax) Therefore: 13% x (1 - 40%) = .078 > 7.8%

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