medium · Investment Banking
In a 50/50 cash and debt deal, the acquirer uses $250 million of cash (earning2.0%) and $250 million of debt (costing 6.0%).
If the tax rate is 25%, what is the weighted average after-tax cost of this financing?
- 2.25%
- 4.0%
- 3.5%
- 3.0%
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