Q$12.$ Galvatron Metals has a bond outstanding with a coupon rate of $5\mathrm{.}6$ percent and semiannual payments. The bond currently sells for $$940$ and matures in $18$ years. The par value is $$1,000$ and the company's tax rate is $21$ percent. What is the company's aftertax cost of debt?

$$940=$$$28\mathrm{.}00\{1-[1(1+R{)}^{36}]\}R+$$$1,000R^{36}$

$R=\mathrm{.}0308,or3\mathrm{.}08\%$

$YTM=3\mathrm{.}080\%2$

$YTM=6\mathrm{.}16\%$

After Tax Cost $of$ Debt $={6\mathrm{.}16}^{**}(1-0\mathrm{.}21)=4\mathrm{.}86\%$