Cost of debt carraway seed company is issuing a 1000 par, Ask an Expert

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(Cost of debt) Carraway Seed Company is issuing a $1,000 par value bond that pays 9 percent annual interest and matures in 11 years. Investors are willing to pay $955 for the bond. Flotation costs will be 13 percent of market value. The company is in a 40 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

The firm's after-tax cost of debt on the bond will be %. (Round to two decimal places.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92420370

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