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To help finance a major expansion, Dimkoff Development Company sold a bond several years ago that now has 20 years to maturity. This bond has
To help finance a major expansion, Dimkoff Development Company sold a bond several years ago that now has 20 years to maturity. This bond has a 7% annual coupon, and it now sells at a price of $1,103.58. The bond cannot be called and has a par value of $1,000. If Dimkoff s tax rate is 40 %, what after-tax component cost of debt should be used in the WACC calculation?
a. 3.03 % b. 3.28 % c. 3.65% d. 3.85% e. 4.04 %
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