Question
Seoul Food Supplies Corporation sold an issue of 10-year bonds. The bonds sold at a $980 price each. The issuance costs is $4 for each
Seoul Food Supplies Corporation sold an issue of 10-year bonds.
The bonds sold at a $980 price each. The issuance costs is $4 for each bond. That is, after issuance costs, Seoul Food Supplies received $976 each.
The face value of the bond is $1,000. The coupon rate is 8% and paid annually.
What is the after-tax cost of debt for these bonds if Seoul Food Supplies marginal tax rate is 40%?
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Financial Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine, Christopher D. Burnley
8th Canadian Edition
111959457X, 978-1119594574
