Question
Contrail Air, Inc. is trying to determine its cost of debt. The company has an outstanding debt issue with 20 years to maturity that is
Contrail Air, Inc. is trying to determine its cost of debt. The company has an outstanding debt issue with 20 years to maturity that is quoted at 96.00% percent of face value. The issue makes semiannual payments and has a coupon rate of 6.00% percent. What is the pretax cost of debt?
| Settlement | 01/01/2000 |
| Maturity | 01/01/2020 |
| Price (% of par) | 96 |
| Coupon rate | 6% |
| Payments per year | 2 |
| Tax rate | 36% |
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Pivotal Decade How The United States Traded Factories For Finance In The Seventies
Authors: Judith Stein
1st Edition
0300171501, 978-0300171501
