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You know that the after-tax cost of debt capital for Pharoah is 8.4 percent. Assume that the firm has only one issue of five-year bonds
You know that the after-tax cost of debt capital for Pharoah is 8.4 percent. Assume that the firm has only one issue of five-year bonds outstanding. The bonds make semiannual coupon payments and the marginal tax rate is 30 percent.
1. What is the current price of the bonds if the coupon rate on those bonds is 12 percent?
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