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(Cost of debt) Carraway Seed Company is issuing a $1 comma 000 par value bond that pays 9 percent annual interest and matures in 6
(Cost of debt) Carraway Seed Company is issuing a $1 comma 000 par value bond that pays 9 percent annual interest and matures in 6 years. Investors are willing to pay $990 for the bond. Flotation costs will be 12 percent of market value. The company is in a 38 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?
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