Question
Cost of Debt Jones, Inc has one outstanding bond issue, which has twelve years remaining to maturity and a coupon rate of 2.325%. Interest payments
Cost of Debt
Jones, Inc has one outstanding bond issue, which has twelve years remaining to maturity and a coupon rate of 2.325%. Interest payments are made semi-annually, the firms tax rate is .35, and the bonds are currently trading at $1,021.00.
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What is the yield to maturity on the bonds?
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Ignoring flotation costs, what is the firms cost of debt (before tax)?
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What is its after-tax cost of debt?
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Handbook Of Consumer Finance Research
Authors: Jing Jian Xiao
2nd Edition
3319288857, 978-3319288857
