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Nitry Enterprises plans to raise funds for a new project by issuing new 30-year 4% coupon bonds. They believe the new issues will sell for
Nitry Enterprises plans to raise funds for a new project by issuing new 30-year 4% coupon bonds. They believe the new issues will sell for $1,075 per bond. The new issue will incur flotation costs of $75 per bond. The corporation is in the 35% tax bracket. Assuming a par value of $1,000 and semiannual coupons, what is the after-tax cost of new debt?
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