Before-tax cost of debt and after-tax cost of debt Personal Finance Problem David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:

Sony Bond

Par value $1000

Coupon interest rate 5.55.%

Corporate tax rate 20%

Cost $910

Years to maturity 10

Answer the following questions:

a. Calculate thebefore-tax costof the Sony bond using the bond's yield to maturity (YTM).

b. Calculate theafter-tax costof the Sony bond given the corporate tax rate.