Problema corporate bond has a face value of 1000 and a, Ask an Expert

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Problem:

A corporate bond has a face value of $1,000 and a coupon rate of 9%. The bond matures in 14 years and has a current market price of $946. If the corporation sells more bonds it will incur flotation costs of $26 per bond. If the corporate tax rate is 35%,

Required:

Question: What is the after-tax cost of debt capital?

Note: Show all workings.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148390

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