Problemtangshan mining corporation is considering issuing, Ask an Expert

Accounting

Problem:

Tangshan Mining Corporation is considering issuing long-term debt. The debt would have a 30 year maturity and a 10 percent coupon rate. The firm would have to pay flotation costs of 10 percent of $1000 face value. The bond is currently selling at face value. The firm's tax rate is 35 percent. Given this information, the after tax cost of debt for Tangshan Mining Corporation would be

A. 7.26%.

B. 11.17%.

C. 10.00%.

D. None of the above

Note: Explain in detail.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169693

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