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A company has calculated the post-tax cost of its redeemable bonds using data available to it. The chief executive is concerned about the impact of
A company has calculated the post-tax cost of its redeemable bonds using data available to it. The chief executive is concerned about the impact of changes in the market price of the bonds and the corporate tax rate on the post-tax cost of the bonds. Based on the above, which two of the following statements are correct? Solution A.If the market price of the bond increases, the post-tax cost of the bond will increase. B.If the market price of the bond decreases, the post-tax cost of the bond will increase. C.If the corporate tax rate increases, the post-tax cost of the bond will increase. D.If the corporate tax rate decreases, the post-tax cost of the bond will increase
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