Currently, there is one outstanding 10% coupon semi-annual bond that sells for $900 and it has 25 years to matuurity.

b. Compute the after-tax cost of debt using the information provided. The firm's tax rate is 25%. Currently, there is one outstanding 10% coupon semi-annual bond that sells for $900 and it has 25 years to matuurity. It will pay par value of $1,000 at maturity. Bond maturity (years) Payments per year Annual coupon rate Par value = Bond price = Tax rate = 25 2 10% $1,000.00 $900.00 25% ra(1 T)