Company XYZ has issued 65,000 zero-coupon bonds with a face value of $1,000. Those bonds will mature in 6 years and the current market price is $622.14 per bond. Investors use semi-annual compounding for bonds. Marginal corporate income tax rate is 21%, find the annual after-tax effective cost of debt.

Lugget Corp. has one bond issue outstanding with an annual coupon of 4%, a face value of $1,000 and a price of $1,179.65, which matures in 10 years. The company's tax rate is 25%. What is the company's after-tax cost of debt?

Sandhill has determined that it could issue $1050 face value bonds with an 8 percent coupon paid semiannually and a 5-year maturity at $954.05 per bond. If Sandhill's marginal tax rate is 36 percent, its after-tax cost of debt is closest to: 6.6 percent. 6.9 percent. 6.2 percent. 6.3 percent.

Dixon Corp has 6% coupon bonds outstanding that have a remaining maturity of 12 years.  These bonds pay interest semiannually, and are currently selling for $1080 per $1000 face value.  If Dixon issues new debt, it plans to sell bonds with a maturity of 12 years.  Estimate Dixon's marginal post-tax cost of debt.  Dixon faces a marginal tax rate of 30%.     3.06%     4.15%     4.35%     3.57%     2.90%