Question
The WeLoveBondValuation Company needs to estimate the cost of debt in their WACC calculation. The 15-year bond issue would have $1,000 par value, 5% coupon
The WeLoveBondValuation Company needs to estimate the cost of debt in their WACC calculation. The 15-year bond issue would have $1,000 par value, 5% coupon rate, and pay interest semiannually. The bonds would sell for $800.20 per bond.
a) What is the cost of debt?
b) If the marginal tax rate of the company is 21%, what is the after-tax cost of debt to be used in the WACC calculation?
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New Venture Creation A Framework For Entrepreneurial Start-ups
Authors: Paul Burns
2nd Edition
1352000504, 978-1352000504
