Question
Determinethe cost of debt with an outstanding debt issueand 18 years to maturity that is quoted at 97.00% of face value.Semiannual payments are made and
Determinethe cost of debt with an outstanding debt issueand 18 years to maturity that is quoted at 97.00% of face value.Semiannual payments are made and has a coupon rate of 10.00%. What is the pretax cost of debt?
Settlement 01/01/2000
Maturity 01/01/2018
Price (% of par) 97
Coupon rate 10%
Payments per year 2
Tax rate 34%
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Financial Markets and Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
5th edition
321280299, 321280296, 978-0321280299
