Rockingham Motors issued a 30-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 103.1 percent of its face value. The company's taxrate is 21 percent. What is the aftertax cost of debt?Multiple ChoiceO6.10%2.72%ООО5.69%5.10%5.99%

Option a: This option is correct.Step 1:We have to calculate the after-tax cost of debt.First of…

Answered: Rockingham Motors issued a 30-year, 8…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Rockingham Motors issued a 30-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 103.1 percent of its face value. The company's tax rate is 21 percent. What is the aftertax cost of debt? Multiple Choice O 6.10% 2.72% О О О 5.69% 5.10% 5.99%