Question
Cost of Capital- (New Stock) A firm can issue 20-year, $1,000 par bonds at a price of 980 but will incur flotation costs of $20
Cost of Capital- (New Stock)
A firm can issue 20-year, $1,000 par bonds at a price of 980 but will incur flotation costs of $20 per bond. The bonds have a coupon rate of 10% and pay interest semiannually. The firm's tax rate is 34%. What is the firms before tax cost of debt? After tax cost of debt?
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Finance And Economics Discussion Series Specification Analysis Of Structural Credit Risk Models
Authors: United States Federal Reserve Board, Jing Zhi Huang, Hao Zhou
1st Edition
1288706871, 9781288706877
