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Tap Ltd is planning to issue face value bonds with 20 years to maturity. The face value of the bond would be $800. The company
Tap Ltd is planning to issue face value bonds with 20 years to maturity. The face value of the bond would be $800. The company is expected to pay coupons on the bonds at 16% annually and expects a net proceed of $220 from each bond. Tap Ltd currently has 24% tax rate. Using the approximation formula estimate the after tax cost of debt for Tap Ltd. Select one: a. 23.40 b. 7.64% c. 0.0764% d. 0.23396
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