Q426
An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax
A.
term structure
B.
market premium
C.
risk premium
D.
cost of debt
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax cost of debt. In most cases, this phrase refers to after-tax cost of debt, but it also means the company's cost of debt before taking taxes into account.