S. Claus & Co. is planning a zero coupon bond issue that has a par value of

Question:

S. Claus & Co. is planning a zero bond issue that has a of 1,000 and matures in 2 years. The bonds will be sold today at a price of 826.45. If the firm’s marginal tax rate is 40%, what is the annual after-tax to the company on this issue?

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...