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Jatalt has decided to issue a 7-year bond with a coupon rate of 7% p.a to raise $600,000. The investors require 10% rate of return.
Jatalt has decided to issue a 7-year bond with a coupon rate of 7% p.a to raise $600,000. The investors require 10% rate of return. Required: A - Calculate the price of this bond if the face value is $1000 and coupon is paid semi-annually. How many bonds need to be issued to receive the required amount of fund?
B - What is the after-tax cost of debt if the tax rate is 30%?
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