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xyz company pays federal income taxes at a rate of 35% on taxable income. Briefly explain the income tax advantage of raising capital by issuing
xyz company pays federal income taxes at a rate of 35% on taxable income.
- Briefly explain the income tax advantage of raising capital by issuing bonds rather than selling capital stock.
- Compute the companys annual after-tax cost of borrowing on an 8%, $5 million bond issue.
- Express this after-tax cost as a percentage of the borrowed $5 million.
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Principles of Managerial Finance
Authors: Chad J. Zutter, Scott B. Smart
15th edition
013447631X, 134476315, 9780134478197 , 978-0134476315
