You have been assigned the task of estimating the after-tax cost of debt for a firm as

Question:

You have been assigned the task of estimating the after-tax for a firm as part of the process in determining the firm’s cost of capital. After doing some checking, you find out that the firm’s original 20-year 9.5% bonds (paid semi-annually), currently have 14 years until they mature and are selling at a price of $1,100 each. You are also told that the investment bankers charge a commission of $25 per bond when new bonds are sold. If these bonds are the only debt outstanding for the firm, what is the after-tax for this firm if the marginal tax rate for the firm is 34 percent?

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...