Question
Haverford Company has a $1,000 par value bond outstanding that now has 25 years to maturity and an 8.00% annual coupon that is paid semiannually.
Haverford Company has a $1,000 par value bond outstanding that now has 25 years to maturity and an 8.00% annual coupon that is paid semiannually. The bond currently sells for $900.90, and the company's tax rate is 40%. What is the component cost of debt for use in the WACC calculation? (After-tax cost of debt) Please show work.
a. 5.41%
b. 5.73%
c. 5.98%
d. 6.09%
e. 6.24%
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Bond Markets Analysis And Strategies
Authors: Frank J. Fabozzi, Francesco A. Fabozzi
10th Edition
026204627X, 978-0253337535
