XYZ Ltd. keeps a perpetual fixed amount of debt in its books. It pays coupon of 15%.

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● XYZ Ltd. keeps a perpetual fixed amount of debt in its books. It pays coupon of 15%. Its debt sells at par in the market at `100. What is the cost of debt if the firm pays 35% tax? What is the cost of debt if it sells

(a) at 5% premium

(b) at 5% discount to the face value?

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Financial Management

ISBN: 9789352605606

1st Edition

Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana

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Question Posted: Jul 24, 2024 10:05 AM

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XYZ Ltd. keeps a perpetual fixed amount of debt in its books. It pays coupon of 15%.

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Financial Management

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