Question
Cost of debt using the approximation formula For each of the following $1,000 par-value bonds, assuming annual interest payment and a 40% tax rate, calculate
Cost of debt using the approximation formula For each of the following $1,000 par-value bonds, assuming annual interest payment and a 40% tax rate, calculate the after-tax cost to maturity using the approximation formula.
Bond Life Underwriting Discount (-) or Coupon
fee premium (+) interest rate
A 20 years $25 -20 9%
B 16 40 +10 10
C 15 30 -15 12
D 25 15 Par 9
E 22 20 -60 11
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Financial And Insurance Formulas
Authors: Tomas Cipra
2010th Edition
3790829013, 978-3790829013
