Question
You are analyzing the after-tax cost of debt for a firm. You know that the firms 12-year maturity, 13.00 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, 13.00 percent semiannual coupon bonds are selling at a price of $1,206.98. These bonds are the only debt outstanding for the firm.
What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent?
What is the current YTM of the bonds and after-tax cost of debt for this firm if the bonds are selling at par? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answers to 2 decimal places, e.g. 15.25%.)
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