Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of 3.72 percent, a par value of $2,000 per bond, matures in 7 years, has a total face
value of $4.7 million, and is quoted at 104 percent of face value. The second issue has a coupon rate of 6.49 percent, a par value of $1,000 per bond, matures in 19 years,
has a total face value of $9.0 million, and is quoted at 96 percent of face value. Both bonds pay interest semiannually. The company's tax rate is 39 percent. What is the firm's
weighted average aftertax cost of debt? Multiple Choice 4.43 % 3.03 % 3.20% 3.36 % 5.50%
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Transcribed Image Text:Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of 3.72 percent, a par value of $2,000 per bond, matures in 7 years, has a total face value of $4.7 million, and is quoted at 104 percent of face value. The second issue has a coupon rate of 6.49 percent, a par value of $1,000 per bond, matures in 19 years, has a total face value of $9.0 million, and is quoted at 96 percent of face value. Both bonds pay interest semiannually. The company's tax rate is 39 percent. What is the firm's weighted average aftertax cost of debt? Multiple Choice 4.43 % 3.03 % 3.20% 3.36 % 5.50%
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