KJ Pharma issues new bonds to fund an acquisition. The face value of the bond is $100
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Question:
KJ Pharma issues new bonds to fund an acquisition. The face value of the bond is $100 and annual coupon is 6.5%. Further, this bond matures in 20 years and is issued at a price of $105. Assuming KJ Pharma's tax rate is 30%, what is its After-Tax Cost of Debt?
a) 4.6%
b) 6.1%
c) 4.2%
d) 6.5%
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