corporate bond has a face value of $1,000 and a coupon rate of 8.25%, paid annually. The bond matures in 15 years and has a current market price of $920 If the corporation sells more bonds it will incur flotation costs of $50per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? A. 7.11 % B. 6.4 % 5.28% D. 4.49%

corporate bond has a face value of $1,000 and a coupon rate of 8.25%, paid annually. The bond matures in 15 years and has a current market price of $920 If the corporation sells more bonds it will incur flotation costs of $50per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? A. 7.11 % B. 6.4 % 5.28% D. 4.49%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 9P: Bond Yield and After-Tax Cost of Debt A companys 6% coupon rate, semiannual payment, 1,000 par value...

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