The cost of equity and flotation costssuppose a company, Ask an Expert

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The Cost of Equity and Flotation Costs

Suppose a company will issue new 25-year debt with a par value of $1,000 and a coupon rate of 8%, paid annually. The tax rate is 40%. If the flotation cost is 3% of the issue proceeds, then what is the after-tax cost of debt? Disregard the tax shield from the amortization of flotation costs. Round your answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91592402

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