The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 9 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 15 percent higher; that is, firms that paid 11 percent for debt last year will be paying 12.65 percent this year. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on its cost last year and the 15 percent increase? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.

The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 9 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 15 percent higher; that is, firms that paid 11 percent for debt last year will be paying 12.65 percent this year. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on its cost last year and the 15 percent increase? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be? Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter15: Choice Of Business Entity—other Considerations

Section: Chapter Questions

Problem 68P

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