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Problem:

A company plans a new issue of bonds with a par value of $1,000, a maturity of 20 years, and a semi-annual coupon rate of 16.0%. Currently, the bond is selling for $842.00. The firm's marginal tax rate is 30%.

Find out:

Question: What will the firm's after-tax cost of debt? Show your work and explain in detail.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91146084

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