Question
4. Neptune Corporation's bonds have 15 years to maturity with a coupon rate of 5%. Interest is paid semi-annually. The bonds sold at par value,
4. Neptune Corporation's bonds have 15 years to maturity with a coupon rate of 5%. Interest is paid semi-annually. The bonds sold at par value, but the firm paid flotation costs amounting to 6.5% of par value. The firm has a marginal tax rate of 21%. What is the firm's after-tax cost of debt for these bonds?
Group of answer choices
5.57%
5.65%
4.46%
4.65%
5.00%
6. Neptune is considering financing a project with debt. Which of the following will make the use of debt less attractive for the firm?
Group of answer choices
its bond rating improves from CCC to AAA
The corporate tax rate increases.
The corporate tax rate decreases
The interest rate on debt decreases
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