Curtis Ltd. issued $100,000 of 8% bonds at face value on October 1, 2014. Interest is paid

Question:

Curtis Ltd. issued $100,000 of 8% bonds at on October 1, 2014. Interest is paid each March 31 and September 30. If Curtis’s tax rate is 40%, what is the annual after-tax borrowing cost?
(a) In percentage terms and
(b) In dollars?

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...