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Given the data below, what is the after-tax cost of debt for Topstone Industries if its debt consists of 5-year bonds rated AA- and the
Given the data below, what is the after-tax cost of debt for Topstone Industries if its debt consists of 5-year bonds rated AA- and the tax rate is 50%? The Treasury yield is 5.19%.
Corporate spreads | ||||
Rating | 3 yr | 5 yr | 10 yr | 30 yr |
AAA | 15 | 22 | 30 | 55 |
AA+ | 20 | 32 | 40 | 60 |
AA | 30 | 37 | 50 | 65 |
AA- | 35 | 45 | 55 | 70 |
A+ | 45 | 58 | 65 | 79 |
A | 58 | 65 | 75 | 90 |
A- | 79 | 85 | 88 | 108 |
3.12% | ||
2.73% | ||
5.64% | ||
2.82% | ||
4.85% |
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