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Problem 14-24 Calculating the Cost of Debt (LO3) Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in
Problem 14-24 Calculating the Cost of Debt (LO3)
Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table.
Bond | Coupon Rate | Price Quote | Maturity | Face Value | |||||||||||
1 | 6.00 | % | 103.26 | 5 | years | $ | 45,000,000 | ||||||||
2 | 7.50 | 110.58 | 8 | years | 40,000,000 | ||||||||||
3 | 7.20 | 109.93 | 15.5 | years | 50,000,000 | ||||||||||
4 | 6.80 | 102.83 | 25 | years | 65,000,000 | ||||||||||
If the corporate tax rate is 34%, what is the after-tax cost of the companys debt? (Do not round intermediate calculations. Round the final answer to 2 decimal places.)
Solve on a financial calculator.
Cost of debt %
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