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P9-5 AFTER-TAX COST OF DEBT For each of the following $1,000-par-value bonds, assuming annual interest payment and a 21% tax rate, calculate the after-tax cost
P9-5
AFTER-TAX COST OF DEBT
For each of the following $1,000-par-value bonds, assuming annual interest payment and a 21% tax rate, calculate the after-tax cost of debt.
\begin{tabular}{|c|c|c|c|c|} \hline Bond & Life(years) & Underwritingfee & Discount()orpremium(+) & Couponinterestrate \\ \hline A & 20 & $25 & $20 & 9% \\ \hlineB & 16 & 40 & +10 & 10 \\ \hline C & 15 & 30 & -15 & 12 \\ \hline D & 25 & 15 & par & 9 \\ \hlineE & 22 & 20 & -60 & 11 \\ \hline \end{tabular}Step by Step Solution
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