Question
Shama's Tours Incorporated plans to issue a 20-year bond. Shama's Tours expects the $1000 par value bonds to sell for $995 each. Issuance costs are
Shama's Tours Incorporated plans to issue a 20-year bond. Shama's Tours expects the $1000 par value bonds to sell for $995 each. Issuance costs are expected to be $5 per $1000 bond, and the coupon rate is 11.875 percent. If the effective tax rate is 40 percent, what is the after-tax cost of debt to Shama's Tours?
| A. 7.21% | |
| B. 5.25% | |
| C. 7.24% | |
| D. 1.21% |
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Principles Of Project Finance
Authors: E. R. Yescombe
2nd Edition
0123910587, 9780123910585
