Question
You are analyzing the after-tax cost of debt for a firm. You know that the firms 12-year maturity, 11.50 percent semiannual coupon bonds are selling
You are analyzing the after-tax cost of debt for a firm. You know that the firms 12-year maturity, 11.50 percent semiannual coupon bonds are selling at a price of $1,222.96. These bonds are the only debt outstanding for the firm.
Current YTM = 8.50%
after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent = 5.62%
QUESTION: What is the current YTM of the bonds and after-tax cost of debt for this firm if the bonds are selling at par?
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
17th Edition
126001391X, 978-1260013917
