Current cost of a bond: Perpetual Ltd. has issued bonds that never require the principal amount to

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Current cost of a bond: Perpetual Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Perpetual must make interest payments into the infinite future. If the bondholders receive annual payments of $75 and the current price of the bonds is $882.35, what is the after-tax cost of this debt for Perpetual if the firm is subject to a 40 percent marginal tax rate?

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Fundamentals Of Corporate Finance

ISBN: 9781119795438

5th Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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