Tax rate 30% Semi-annual interest payments $1,000 face value Use chart to find YTM

Use the information below to illustrate how debt serves as a tax shield. Long-term debt Interest rate 400,000 0.06 1,000,000 500,000 Revenues erating expenses Use the data below to answer questions 2-4 Debt 1,000,000 0.055 1,000 Loan Bonds issued Price per bond 30 yr. A rating 2 What is the yield to maturity on the bond issue? What are the weights the loan and bond issue contribute to the firm's debt? 4.What is the after-tax weighted average cost of debt