1. The Ess Kay Refrigerator Company is deciding to issue 2,000,000 of 1,000, 14 per cent, 7...
Question:
1. The Ess Kay Refrigerator Company is deciding to issue 2,000,000 of 1,000, 14 per cent, 7 year debentures. The debentures will have to be sold at a discount rate of 3 per cent. Further, the firm will pay an underwriting fee of 3 per cent of the face value. Assume a 35 per cent tax rate. Calculate the after-tax cost of the issue. What would be the after-tax cost if the debenture were sold at a premium of 30?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: