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Marysa Corp. issued a 16-year, 6 percent semiannual bond 2 years ago. The bond currently sells for 91 percent of its face value. The book
Marysa Corp. issued a 16-year, 6 percent semiannual bond 2 years ago. The bond currently sells for 91 percent of its face value. The book value of the debt issue is $40 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 11 years left to maturity; the book value of this issue is $30 million and the bonds sell for 57 percent of par. The companys tax rate is 21 percent. What is your best estimate of the aftertax cost of debt?
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