13.15

You know that the after-tax cost of debt capital for Bubbles Champagne is 8.00 percent. Assume that the firm has only one issue of five-year bonds outstanding. The bonds make semiannual coupon payments and the marginal tax rate is 30 percent.

CalculatePre-tax cost of debt capital.(Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

Pre-tax cost of debt capital:________%

What is the current price of the bonds if the coupon rate on those bonds is 11.43 percent?

Current price of the bonds: $_______________