Perpetualcold Refrigeration Company (PRC) can borrow funds at an interest rate of 9.70% for a period of four years. Its marginal federal-plus-state tax rate
Perpetualcold Refrigeration Company (PRC) can borrow funds at an interest rate of 9.70% for a period of four years. Its marginal federal-plus-state tax rate is 25%. PRC's after-tax cost of debt is 7.28% (rounded to two decimal places). At the present time, Perpetual cold Refrigeration Company (PRC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,438.04 per bond, carry a coupon rate of 14%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If PRC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) O 3.10% O 3.57% O 2.79% O 2.48%
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Authors: Lawrence J Gitman, Chad J Zutter
12th edition
9780321524133, 132479540, 321524136, 978-0132479547
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