KatyDid Clothes has a $150 million (face value) 30-year bond issue selling for 104 percent of par that carries a coupon rate of 11 percent, paid semi-annually.  What would be Katydid's before-tax component cost of debt?

Jones Cricket Institute issued a 30-year, 8 percent semi-annual bond 3 year ago. The bond currently sells for 93 percent of its face value. The Company’s tax rate is 35%. a. What is the pre-taxed cost of debt? b. What is the after-tax cost of debt? c. Which is more relevant, the pre-tax or the after- tax cost of debt? Why?      In the question above, suppose the book value of the debt issues is $60 million.  In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years to mature. The book value of this issue is $35 million and the bond sell for 57 percent of par. a. What is the company’s total book value of debt?               b. The total market value? c. What is your best estimate of the after-tax cost of debt now?

Suppose ABE Co. issued a 20-year, 8 percent coupon rate bond three years ago. The bond is currently selling for $715.21. The bond has $1,000 face value and pays interests annually. If ABE’s tax rate is 30 percent, what is the firm’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.