− 𝜆)𝐾𝑒 + 𝜆(1 − 𝜏)𝑖. Which of these is correct?
A. The debt-to-equity ratio is λ
B. The tax rate is τ
C. The after-tax cost of debt capital is i
D. all of the options
Answer:B
− 𝜆)𝐾𝑒 + 𝜆(1 − 𝜏)𝑖. Which of these is correct?
A. The debt-to-equity ratio is λ B. The tax rate is τ C. The after-tax cost of debt capital is i D. all of the options