Husky Enterprises recently sold an issue of 10-year maturity bonds. The bonds were sold at a deep discount price of $545 each. After flotation costs, Husky received $530.80 each. The bonds have a $1,000 maturity value and pay $50 interest at the end of each year. Compute the after-tax cost of debt for these bonds if Husky's marginal tax rate is 40 percent. Use Table II and Table IV to answer the question. Round your answer to one decimal place. % - TABLE IV Present Value of an Annuity Interest Factor (PVIFA) ($1 per period at P per period for n periods); 1- PVANO - PMT (PVIFA,..) PVIFA- Period, n 196 0.990 296 0.980 39 0.971 496 0.962 59 0.952 6% 79 89 996 10% 119 1296 0.943 0.935 0.926 1.970 1.942 3 2.941 4 3.902 5 4.853 6 5.795 7 6.728 8 7.652 2.884 3.808 4.713 5.601 6.472 7.325 1.913 2.829 3.717 4.580 5.417 1.886 1.859 1.833 1.808 1.783 2.775 3.630 4.452 2.723 2.673 2.624 2.577 0.917 1.759 2.531 0.909 1.736 2.487 0.901 1.713 0.893 2.444 2.402 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 4.329 4.212 4.100 3.993 5.242 5.076 4.917 4.766 4.623 9 8.566 8.162 10 9.471 8.983 6.230 7.020 7.786 8.530 6.002 6.733 5.786 5.582 5.389 5.206 3.890 4.486 5.033 3.791 3.696 3.605 6.463 6.210 5.971 5.747 5.535 4.355 4.868 5.335 7.435 8.111 7.108 7.722 6.802 6.515 6.247 5.995 5.759 7.360 7.024 6.710 6.418 6.145 4.231 4.712 5.146 5.537 5.889 4.111 1.668 2.36 3.517 3.998 4.564 4.968 5.328 5.650 4.423 4.799 5.132 11 10.368 9.787 12 11.255 10.575 9.253 9.954 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 13 12.134 14 13.004 15 13.865 16 14.718 17 18 19 15.562 16.398 17.226 11.348 10.635 12.106 11.296 12.849 11.938 13.578 12.561 14.292 13.166 14.992 13.754 15.678 14.324 9.385 9.986 8.863 8.384 7.943 7.536 7.161 6.814 6.492 6.194 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 10.563 11.118 11.652 12.166 11.274 12.659 13.134 9.899 10.380 10.838 9.295 8.745 8.244 7.786 7.367 6.982 6.628 20 18.046 24 21.243 25 22.023 30 25.808 16.351 14.877 18.914 16.936 19.523 17.413 22.397 19.600 13.590 15.247 11.690 12.085 12.462 15.622 17.292 13.799 14.094 15.373 40 32.835 27.355 23.115 19.793 17.159 50 39.196 50 44.955 Period, n 14% 31.424 34.761 25.730 27.676 21.482 22.623 18.256 18.929 9.712 10.106 10.477 10.828 11.158 11.470 12.550 12.783 13.765 15.046 15.762 9.108 8.559 8.061 7.606 7.191 6.811 9.447 8.851 8.312 7.824 7.379 6.974 9.763 9.122 8.544 8.022 7.549 7.120 10.059 10.336 9.372 8.756 8.201 7.702 7.250 9.604 8.950 8.365 7.839 7.366 10.594 11.469 11.654 9.818 10.529 9.128 8.514 7.963 7.469 9.707 8.985 8.348 7.784 10.675 9.823 9.077 8.422 7.843 12.409 11.258 10.274 9.427 8.694 8.055 16.161 15% 16% 1796 1896 0.877 0.870 0.862 0.855 0.847 13.332 13.801 14.039 19% 0.840 1.647 1.626 1.605 1.585 1.566 2.322 2.283 2.246 2.210 2.174 2.914 2.855 2.798 2.743 2.690 3.433 3.352 3.274 3.199 3.127 6 3.889 3.784 3.685 3.589 3.498 1.547 2.140 2.639 3.058 3.410 11.925 12.233 12.377 20% 0.833 1.528 2.106 2.589 2.991 10.757 9.779 10.962 11.048 9.915 8.951 9.042 8.244 8.304 9.967 9.074 8.324 24% 0.806 1.457 28% 1.981 2.404 0.781 1.392 1.868 2.241 32% 0.758 1.332 2.745 2.532 1.766 2.096 2.345 36% 0.735 1.276 1.674 0.714 1.224 1.589 1.966 1.849 3.326 3.020 2.759 2.534 2.181 2.399 2.035 2.168 7 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.242 2.937 2.678 2.455 2.263 8 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.421 3.076 2.786 2.540 2.331 9 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.566 3.184 2.868 2.603 2.379 10 5.216 5.019 4.833 4.659 4.494 4.339 4.193 3.682 3.269 2.930 2.650 2.414 11 5.453 5.234 5.029 4.836 4.656 4.486 4.327 3.776 3.335 2.978 2.683 12 5.660 5.421 13 5.842 5.583 14 6.002 5.724 5.197 5.342 5.468 988 4.611 4.439 3.851 3.387 4.715 4.533 3.912 5.229 5.008 4.802 4.611 3.962 3.459 3.013 3.040 3.061 2.708 2.727 2.438 2.456 2.469 2.740 2.478 15 6.142 5.847 5.575 5.324 5.092 16 6.265 5.954 5.669 5.405 5.162 4.876 4.938 4.675 4.001 3.483 3.076 2.750 2.484 4.730 4.033 3.503 3.088 2.758 2.489 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.059 3.518 3.097 2.763 2.492 18 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.080 3.529 3.104 2.767 2.494 19 6.550 6.198 5.877 5.584 5.316 5.070 4.844 4.097 3.539 3.109 2.770 2.496 20 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.110 3.546 3.113 2.772 2.497 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.143 3.562 3.121 2.776 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.147 3.564 3.122 2.776 2.499 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.160 3.569 3.124 2.778 2.500 7.105 6.642 6.233 5.871 5.548 5.258 50 60 7.133 6.661 6.246 7.140 6.665 6.249 5.880 5.882 5.554 5.555 5.262 5.263 4.997 4.999 5.000 4.166 3.571 3.125 4.167 4.167 3.571 3.571 3.125 3.125 2.778 2.778 2.778 2.500 2.500 2.500 TABLE I FV (PVIF,..) Period, n Present Value Interest Factor (PVIF) ($1 at % per period for n periods); PVIF (1+6)** PV 1 1.000 0.990 0.980 0.971 1.000 0.980 0.961 0.942 39 1.000 0.971 0.943 0.915 4 0.961 0.924 0.889 4% 1.000 0.962 0.925 0.889 0.855 596 6% 1.000 0.952 0.907 0.864 0.823 1.000 0.943 0.890 0.840 79 1.000 0.935 896 9% 1.000 0.926 1.000 0.917 0.873 0.857 0.842 10% 1.000 0.909 0.826 1196 0.816 0.794 0.772 0.751 1.000 0.901 0.812 0.731 129 1.000 0.893 0.797 0.712 1396 1.000 0.885 0.783 0.693 0.792 0.763 0.735 0.708 5 0.951 0.906 0.863 0.822 0.784 0.747 O 0.942 0.888 0.838 7 0.933 0.871 8 0.923 9 0.914 0.853 0.837 0.813 0.789 0.766 0.790 0.760 0.731 0.746 0.711 0.677 0.705 0.665 0.627 0.713 0.666 0.623 0.681 0.650 0.683 0.621 0.630 0.583 0.596 0.564 0.659 0.593 0.535 0.636 0.613 0.567 0.543 0.547 0.513 0.482 0.582 0.540 0.502 0.467 0.434 0.507 0.452 0.404 0.480 0.425 0.376 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.905 0.820 0.744 11 0.896 0.804 0.722 0.676 0.650 0.614 0.558 0.508 0.585 0.527 0.475 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.463 0.429 0.397 0.368 0.422 0.386 0.391 0.352 0.388 0.356 0.326 0.350 0.317 0.319 0.290 0.286 0.361 0.322 0.287 0.257 0.333 0.295 0.261 0.231 0.258 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 15 0.861 0.743 0.642 0.853 17 0.844 18 0.836 19 0.828 20 0.820 0.728 0.714 0.700 0.686 0.673 0.623 0.605 0.587 0.570 0.555 0.534 0.513 0.494 0.475 0.481 0.417 0.362 0.315 0.275 0.458 0.436 0.416 0.396 0.394 0.339 0.292 0.252 0.239 0.218 0.209 0.188 0.371 0.350 0.317 0.270 0.231 0.198 0.296 0.250 0.212 0.180 0.331 0.276 0.232 0.194 0.164 0.554 24 0.788 0.622 0.492 25 0.780 0.610 0.478 0.456 0.390 0.375 0.377 30 0.742 0.552 0.412 0.308 40 0.672 0.453 0.307 0.208 50 60 Period, n 0.608 0.550 14% 1.000 0.877 0.372 0.305 0.228 0.170 0.141 0.095 0.310 0.295 0.231 0.142 0.087 0.054 0.312 0.247 0.233 0.174 0.258 0.215 0.178 0.149 0.170 0.153 0.138 0.124 0.229 0.205 0.183 0.163 0.146 0.204 0.181 0.160 0.141 0.125 0.130 0.111 0.116 0.098 0.197 0.184 0.158 0.126 0.102 0.082 0.146 0.116 0.092 0.131 0.099 0.075 0.057 0.097 0.054 0.030 0.067 0.046 0.032 0.034 0.017 0.021 0.010 0.013 0.006 0.022 0.009 0.003 1596 1.000 0.870 16% 1.000 0.862 17% 1.000 1896 1.000 19% 1.000 20% 1.000 0.855 0.847 0.840 0.833 0.769 0.756 0.743 0.731 0.718 0.706 0.694 24% 1.000 0.806 0.650 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.524 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.423 28% 1.000 0.781 0.610 0.477 0.373 0.074 0.044 0.015 0.005 0.002 329 1.000 0.758 0.574 0.435 0.104 0.066 0.059 0.033 0.087 0.047 0.026 0.011 0.008 0.003 0.001 36% 1.000 1.000 0.002 0.001 40% 0.735 0.714 0.541 0.510 0.398 0.364 0.519 6 0.456 0.400 9 10 12 0.351 0.308 0.270 0.237 0.208 0.497 0.432 0.376 0.327 0.476 0.456 0.437 0.419 0.402 0.341 0.410 0.390 0.370 0.352 0.354 0.333 0.314 0.305 0.285 0.266 0.296 0.249 0.335 0.279 0.233 0.275 0.222 0.179 0.284 0.247 0.215 0.187 13 14 160 15 0.140 0.123 17 0.108 18 0.095 0.109 0.141 0.123 0.107 0.093 0.081 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.243 0.208 0.178 0.152 0.130 0.111 0.225 0.191 0.162 0.137 0.116 0.099 0.209 0.176 0.148 0.124 0.194 0.162 19 0.083 20 0.073 0.070 0.061 0.080 0.069 0.060 0.051 0.095 0.081 0.069 0.084 0.071 0.104 0.088 0.074 0.062 0.059 0.051 0.060 0.051 0.052 0.043 0.043 0.037 24 0.043 0.035 0.028 0.023 0.038 0.030 0.024 0.020 30 0.020 40 0.005 60 0.001 0.000 0.015 0.004 0.001 0.000 0.012 0.009 0.003 0.001 0.000 0.002 0.000 0.000 0.019 0.016 0.007 0.001 0.000 0.000 0.044 0.037 0.031 0.015 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.144 0.116 0.094 0.291 0.227 0.178 0.139 0.108 0.329 0.250 0.189 0.143 0.108 0.292 0.215 0.158 0.116 0.085 0.260 0.186 0.133 0.095 0.068 0.082 0.063 0.048 0.085 0.062 0.046 0.035 0.066 0.047 0.034 0.025 0.076 0.061 0.049 0.040 0.032 0.026 0.021 0.052 0.040 0.032 0.025 0.019 0.015 0.012 0.036 0.025 0.018 0.027 0.021 0.016 0.012 0.009 0.007 0.018 0.014 0.013 0.009 0.031 0.017 0.009 0.005 0.010 0.007 0.005 9.004 0.003 0.006 0.005 0.003 0.002 0.002 0.026 0.014 0.007 0.013 0.006 0.003 0.013 0.005 0.001 0.000 0.000 0.010 0.004 0.001 0.005 0.002 0.002 0.001 0.004 0.001 0.001 0.000 0.002 0.001 0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000