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Please explain the steps for how the below problem is correct. I get 4.6% from my calculations. A company has outstanding bonds with a 10-year
Please explain the steps for how the below problem is correct. I get 4.6% from my calculations.
A company has outstanding bonds with a 10-year maturity date and a face value of $1,000. The bonds have an annual coupon payment of $80 and current market price of $1,155. If the company has a marginal tax rate of 22%, what would be a reasonable estimate of their after-tax cost of debt? O a. 1.796 O b. 1.896 O c. 4.696 d. 5.196 e. 5.496 Hide Feedback Correct
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