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Assume that JCT Inc. issue 30-year bond paying a 6% annual coupon. Expected price to be paid by the investors is $910. The expected flotation
Assume that JCT Inc. issue 30-year bond paying a 6% annual coupon. Expected price to be paid by the investors is $910. The expected flotation cost per bond is $41, and the firm is in the 35% tax bracket.
Compute the following:
a. the yield to maturity on the firm's bonds
b. the firm's after-tax cost of existing debt
c. the firm's after-tax cost of new debt
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