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You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 7.4 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, 7.4 percent coupon bonds are selling at a price of $831.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding, answer the following questions. What is the current YTM on the bonds? Current YTM for the bonds (rounded to 0 decimal places) : 10%. What is the after-tax cost of debt for this firm if it is subject to 30 percent marginal and average tax rates? (Round final answer to 2 decimal places, e.g. 15.25%)
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