A company is going to issue a $ 1 , 0 0 0 par value bond that

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Question:

A company is going to issue a $

1, 000

par value bond that pays a

7 %

annual coupon. The company expects investors to pay $

942

for the

20 -

year bond. The expected flotation cost per bond is $

42,

and the firm is in the

34 %

tax bracket. Compute the following:

.

the yield to maturity on the firm's bonds

.

the firm's after

-

tax cost of existing debt

.

the firm's after

-

tax cost of new debt

Posted Date: May 18, 2024 08:15 PM

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A company is going to issue a $ 1 , 0 0 0 par value bond that

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