cap 11 # 9

Airborne Airlines, Inc., has bonds in circulation with a value equal to $1,000 and

25 years to maturity. The bonds offer an annual payment of 78 dollars of interest and current-

Mind is sold in 8/5 dollars. Airborne is in the 30% tax line. The company

He wants to know what the probable cost would be

After taxes

of a new bond issue.

And performances

About the nuer

To enso

It will be the same

) that the performance

To maturity on the old issue because the risk and the maturity fee will be

Similar

Calculate the approximate yield at maturity (tormu to -l on the anti-

Gua and use the result

As the performance of the

Eject the appropriate tax arustes

To determine the cost of debt after