Cost of debt for a firm you are analyzing the after tax, Ask an Expert

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Cost of debt for a firm: You are analyzing the after tax cost of debt for a firm. You know that the firm's 12 year maturity, 9.75 percent semi-annual coupon bonds are selling at a price of $1,200. If these bonds are the only debt outstanding for the firm, what is the 1. After-tax cost of debt for this firm if the marginal tax rate for the firm is 34%? 2. After-tax cost of debt if selling at par?

Maturity 12

Coupon rate 9.50%

Current bond price $1,200

Tax rate 34%

Par value $1,000

Coupon frequency 2

2. What is expected beta of a national chain of home goods stores?

Near 1

Between 0 and 1

Greater than 1

Near 0

Not enough information given

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Financial Management, Finance

Category:- Financial Management
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