Problemdotcom has determined that it could issue 1400 face, Ask an Expert

Accounting

Problem:

Dot.Com has determined that it could issue $1400 face value bonds with an 10 percent coupon paid semiannually and a 5-year maturity at $1285.06 per bond.

Requirement:

Question: If Dot.Com's marginal tax rate is 38 percent, its after-tax cost of debt is closest to:

7.8 percent
7.2 percent
7.4 percent
7.6 percent

Note: Provide support for your underlying principle.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167577

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