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To find the after-tax cost of debt, multiply the before-tax cost of debt by Bedrick Co. can borrow at an interest rate of 10.2% for
To find the after-tax cost of debt, multiply the before-tax cost of debt by Bedrick Co. can borrow at an interest rate of 10.2% for a period of five years. Its marginal federal-plus-state tax rate is 35%. What is Bedrick's after-tax cost of debt? Bedrick Co. has outstanding 10-year noncallable bonds with a face value of $1,000. These bonds have a current market price of $1, 092.79, a coupon rate of 11%, and annual coupon payments. The company faces a tax rate of 35%. If the company wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt? 6.19% 7.43% 4.95% 5.57%
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