Question
1) Barry Bank issued a 25-year, 3 percent semiannual bond seven years ago. The bond currently sells for 107 percent of its face value. The
1) Barry Bank issued a 25-year, 3 percent semiannual bond seven years ago. The bond currently sells for 107 percent of its face value. The companys tax rate is 21 percent.
A. What is the pretax cost of debt?
B. What is the after-tax cost of debt?
C. Which is more relevant, the pretax or the after-tax cost of debt? Why?
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
13th Edition
1337395080, 9781337395083
