Question
The Yerby Companys currently outstanding bonds have a 13.3 percent coupon and a 6.7 percent yield to maturity. Yerby believes it could issue new bonds
The Yerby Companys currently outstanding bonds have a 13.3 percent coupon and a 6.7 percent yield to maturity. Yerby believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40 percent, what is Yerbys after-tax cost of debt?
| a. | 5.32% | |
| b. | 4.02% | |
| c. | 13.30% | |
| d. | 7.98% | |
| e. | 6.70% |
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Fundamentals Of Investments Valuation And Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
9th Edition
1260013979, 9781260013979
