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( Cost of debt ) Carraway Seed Company is issuing a$1,000 par value bond that pays 88 percent annual interest and matures in13 years. Investors
(Cost of debt) Carraway Seed Company is issuing a$1,000 par value bond that pays 88 percent annual interest and matures in13 years. Investors are willing to pay
$935 for the bond. Flotation costs will be11 percent of market value. The company is in a 35 percent tax bracket. What will be the firm's after-tax cost of debt on thebond?
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