Question
David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security: SONY BOND Par Value $1000
David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
SONY BOND
Par Value $1000 Coupon Interest Rate 5.5% Tax bracket 35%
Cost $ 930 Years to maturity 10
Answer the following questions.
a. calculate the before-tax cost of the Sony bond using thebond's yield to maturity? YTM (round to 2 decimal places)
b. Calculate the after-tax cost of the Sony bond given the corporate tax rate? (round to 2 decimal places)
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Question: David Abbot is interested in purchasing a bond iss...David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the security:
SONY BOND
Par Value $1000 Coupon Interest Rate 6% Tax bracket 20%
Cost $ 930 Years to maturity 10
Answer the following questions.
a. calculate the before-tax cost of the Sony bond.
b. Calculate the after-tax cost of the Sony bond given David's tax bracket
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Principles of Managerial Finance
Authors: Chad J. Zutter, Scott B. Smart
15th edition
013447631X, 134476315, 9780134478197 , 978-0134476315
