Question
Bond Yield and After-Tax Cost of Debt A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at
Bond Yield and After-Tax Cost of Debt
A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $617.71. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places.
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Rockin Your Business Finances
Authors: Chrstine Odle
1st Edition
0999135104, 9780999135105
