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dont know if any of the choices i selected are correct help! not sure how to calculate ytm for last question (with calculator) The before-tax
dont know if any of the choices i selected are correct help! not sure how to calculate ytm for last question (with calculator)
The before-tax cost of debt is the interest rate that a firm pays on any new debt financing. Three Waters Company (TWC) can borrow funds at an interest rate of 7.30% for a period of four years. Its marginal federal-plus-state tax rate is 30%. TWC's after-tax cost of debt is 5.11% (rounded to two decimal places). At the present time, Three Waters Company (TWC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,050.76 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal- plus-state tax rate of 30%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 07.31% 06.09% O 5.48% O 7.00%Step by Step Solution
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