Perpetual Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Perpetual must make interest payments into the infinite future. If the bondholders receive annual payments of $91 and the current price of the bonds is $905, then what is the after-tax cost of this borrowing for Perpetual if the firm is in the 40 percent marginal tax rate?
Pre-tax cost of debt capital=
After-tax cost of debt =