Shanken corp issued a bond with a maturity of 10 years and, Ask an Expert

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Shanken Corp. issued a bond with a maturity of 10 years and a semiannual coupon rate of 8 percent 3 years ago. The bond currently sells for 96 percent of its face value. The book value of the debt issue is $50 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years left to maturity; the book value of this issue is $30 million and the bonds sell for 55 percent of par. The company’s tax rate is 35 percent. What is your best estimate of the aftertax cost of debt?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91788021

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