Question
A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $639.52. The company's federal-plus-state
A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $639.52. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places.
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Basic Finance An Introduction to Financial Institutions, Investments and Management
Authors: Herbert B. Mayo
11th Edition
1285425790, 1285425795, 9781305464988 , 978-1285425795
