Question
The interest cost for short-term debt is 4%. For long-term debt, the company has only one semiannual coupon bond outstanding. The coupon rate is 7%;
The interest cost for short-term debt is 4%. For long-term debt, the company has only one semiannual coupon bond outstanding. The coupon rate is 7%; time to maturity is 20 years; and current bond price is 110% of face value. Corporate tax rate is 21%.
LT debt is 45,000
estimate before tax cost of debt
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Public Finance A Contemporary Application Of Theory To Policy
Authors: David N Hyman
10th Edition
053875446X, 978-0538754460
