Question
Carraway Seed Company is issuing a $1,000 par value bond that pays 12 percent annual interest and matures in 14 years. Investors are willing to
Carraway Seed Company is issuing a $1,000 par value bond that pays 12 percent annual interest and matures in 14 years. Investors are willing to pay $985 for the bond. Flotation costs will be 15 percent of Market value. The company is in a 25 percent tax bracket. What will be the firms after-tax cost of debt on the bond?
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
5th Edition
0078034663, 978-0078034664
