Question
As a scientist for an automobile parts company, you invented a missile launcher that can be installed under the hood of any model of car.
As a scientist for an automobile parts company, you invented a missile launcher that can be installed under the hood of any model of car. The product is called the TOW Under Hood. The company plans to issue bonds to finance development and marketing of your brilliant idea. The investment banker estimates that the bond will sell for a price of $1219.16. The bond pays annual coupons at the rate of 7%. The bond has a face value of $1000 and matures in 8 years. What is the cost of debt to your company with a 40% tax rate?
The pretax cost of debt is %. (Round to two decimal places.)
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