Question
A company issues a 1,000 SAR par value bond that pays 8 percent annual interest and matures in 17 years. Investors are willing to pay
A company issues a 1,000 SAR par value bond that pays 8 percent annual interest and matures in 17 years. Investors are willing to pay 800 SAR for the bond. Flotation costs will be 3 percent of market value. The company is a 33 percent marginal tax bracket. What will be the firm's after-tax cost of debt on the bond?
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
7th Edition
1473778913, 978-1473778917
