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
Correct Answer: cost of debt
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.