You are analyzing the after$-$tax cost of debt for a firm. You know that the firm's $12-$year maturity, $14\mathrm{.}50$ percent semiannual coupon

bonds are selling at a price of $$1,090.$ Assuming that these bonds are the only debt outstanding for the firm.

Problem $13\mathrm{.}19$ a$1-$a$3($a$1)$

Correct Answer

What is the current YTM of the bonds? $($Round intermediate calculations to $4$ decimal places, e$.$g$.1\mathrm{.}2514$ and final

answer to $2$ decimal places, e$.$g$.15\mathrm{.}25\%.)$

YTM

$\%$

Your answer is correct.

eTextbook and Media

Solution

Problem $13\mathrm{.}19$ a$1-$a$3($a$2)$

Your answer is incorrect.

What is the after$-$tax cost of debt for this firm if it has a marginal tax rate of $34$ percent? $($Round final answer to $2$ decimal

places, e$.$g$.15\mathrm{.}25\%.$