Question
Suppose a firm has a bond issue currently outstanding that has 25 years left to maturity. The coupon rate is 8.5% and the coupons are
Suppose a firm has a bond issue currently outstanding that has 25 years left to maturity. The coupon rate is 8.5% and the coupons are made semi-annually. The bond is currently selling for 950 per 1000 bond. The firm faces a 35% tax rate. What is the firm's effective cost of debt?
Please show your work without using a financial calculator
A) 4.50
B) 9.01
C) 5.85
D) 2.93
E) 5.53
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Public Finance
Authors: Richard W. Tresch
2nd Edition
0126990514, 978-0126990515
