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1. SAMREF is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 10 years. Investors are willing to pay
- 1. SAMREF is issuing a $1,000 par value bond that pays 7 percent annual interest and matures in 10 years. Investors are willing to pay $1,200 for the bond. Floatation costs will be 4 percent of market value. The Company is in a 25 percent tax bracket. What will be the firms after-tax cost of debt on the bond? (3 Marks)
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