Question
(Costof debt) The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value
(Costof debt)
The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000
par value bonds at a net price of $935. The coupon interest rate is 15percent, and the bonds would mature in 13 years. If the company is in a 39 percent taxbracket, what is theafter-tax cost of capital to Zephyr forbonds?
years. If the company is in a 3939
percent taxbracket, what is theafter-tax cost of capital to Zephyr forbonds?
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
5th edition
321280299, 321280296, 978-0321280299
