In addition the firm would have to pay flotation costs of 5, Ask an Expert

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Nico Trading Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and 10 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 5 percent of face value. In addition, the firm would have to pay flotation costs of 5 percent of face value. The firm's tax rate is 35 percent. Given the information, the after tax cost of debt for nico Trading would be

A) 7.26%

B) 11.17%

C) 10.00%

D) none of the above

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M949924

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