Question
Carraway Seed Company is issuing a $1,000 par value bond that pays 8 percent annual interest and matures in 7 years. Investors are willing to
Carraway Seed Company is issuing a $1,000 par value bond that pays 8 percent annual interest and matures in 7 years. Investors are willing to pay $935 for the bond. Flotation costs will be 11 percent of market value. The company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?
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Global Corporate Finance A Focused Approach
Authors: Suk Hi Kim, Kenneth A Kim
2nd Edition
9814618004, 9789814618007
