What is the after-tax cost of debt and how do you calculate it?

```
After-Tax Rd = Pretax Rd × (1 − t)
```

Pretax 5%, t = 30% → after-tax = 3.5%.

typically the yield-to-maturity of outstanding bonds.

The tax rate should be marginal, not average. In most jurisdictions the marginal corporate tax rate is ~25–30%.

the tax shield doesn't apply fully → a higher effective cost of debt.