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you are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 8.6 percent coupon bonds are selling at a
you are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 8.6 percent coupon bonds are selling at a price of $761.14. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. The current YTM of the bonds is 12.2%.
What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate?
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