Question
Bond Yield and After-Tax Cost of Debt A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at
Bond Yield and After-Tax Cost of Debt
A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at a price of $622.23. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? Round your answer to two decimal places. (Hint: Base your answer on the nominal rate.)
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The Bank Credit Analysis Handbook
Authors: Jonathan Golin, Philippe Delhaise
2nd Edition
0470821574, 978-0470821572
