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( Show your work step by step! You will get a score of zero if you fail to show your work.) Sunny, Corp., issued bondswith
(Show your work step by step! You will get a score of zero if you fail to show your work.)
Sunny, Corp., issued bondswith a par value of $1,000 and 5.5% coupon rate, 20 years left to maturity, and the price of these bonds is selling at $1,120. The company's tax rate is 25percent.
(1) What is the pre-tax cost of debt of the company?
(2)What is the after-tax cost of debt of the company?
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