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Cost of debt using the approximation formula For each of the following $1,000-parvalue bonds, assuming annual interest payment and a 40% tax rate, calculate the
Cost of debt using the approximation formula For each of the following $1,000-parvalue bonds, assuming annual interest payment and a 40% tax rate, calculate the after-tax cost to maturity using the approximation formula. Discount ( ) or Coupon Bond Life (years) Underwriting fee premium ( ) interest rate A 20 $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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