Question
A company is going to issue a $1,000 par value bond that pays a 5% annual coupon. The company expects investors to pay $684.5 for
A company is going to issue a $1,000 par value bond that pays a 5% annual coupon. The company expects investors to pay $684.5 for the 20-year bond. The expected flotation cost per bond is $50, and the firm is in the 30% tax bracket. Compute the firm's after-tax cost of new debt. Round your calculations to the nearest 0.01%.
Please include the TVM calculations.
A. 6.31
B. 5.41
C. 5.86
D. 4.96
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Canadian Income Taxation Planning And Decision Making
Authors: Joan Kitunen, William Buckwold
17th Edition 2014-2015 Version
1259094332, 978-1259094330
