Question
Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 10% semi-annual coupon bonds. The market price
Crandal Dockworks is undergoing a major expansion. The expansion will be financed by issuing new 15-year, $1,000 par, 10% semi-annual coupon bonds. The market price of the bonds is $1,090 each. Crandal's flotation expense on the new bonds will be $40 per bond. Crandal's marginal tax rate is 25%. What is theAfter-Tax cost of debt for the newly-issued bonds?
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Principles of Managerial Finance
Authors: Chad J. Zutter, Scott B. Smart
15th edition
013447631X, 134476315, 9780134478197 , 978-0134476315
