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At the present time, Cute Camel Woodcraft Company (CCWC) has a series of five-year noncallable bonds with a face value of $1,000 that are outstanding.
At the present time, Cute Camel Woodcraft Company (CCWC) has a series of five-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,229.24 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If CCWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)?
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