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after tax cost of debt Wildhorse Ltd, has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Wildhor se must
after tax cost of debt
Wildhorse Ltd, has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Wildhor se must make interest payments into the infinite future. If the bondholders receive annual payments of 581 and the current price of the bonds 15 51,080 Problem 13.16(a1) Your answer is incorrect What is the pre-tax cost of this debt? (Round answer to 2 decimal places, eg. 15.25\%.) Pre-taxcost of debt 96 eTextbook and Media Solution Assistance Used Since the bonds represent a perpetuity, we know that the pretax cost of debt can be solved using the following: kdebt=CouponPayment/BondPrice=$81/$1,080=0.0750=7.50% Attempts: 3 of 3 used Problem 13.16(a2) What is the after-tax cost of this debt for Wiidhorse if the firm is subject to a 40 percent marginal tax rate? (Round final answer to 2 decimal ploces,es, 15.25\%.) After-tax cost of debt Step by Step Solution
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