Question
Cost of debt using both methods Currently, Warren Industries can sell 15 year, $1000 par value bonds paying annual interest at a 7% coupon rate.
Cost of debt using both methods
Currently, Warren Industries can sell 15 year, $1000 par value bonds paying annual interest at a 7% coupon rate. Because current market rates for similar bonds are just under 7%, warren can sell its bonds for $1010 each, warren will incur flotation costs of $30 per bond in this process. The firm is in the 40% tax bracket.
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Fundamentals Of Corporate Finance
Authors: Berk, Peter DeMarzo, Jarrad Harford
3rd Global Edition
1292018402, 9781292018409
