Tm inc is issuing a 1000 par value bond that pays 77, Ask an Expert

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TM, Inc. is issuing a $1000 par value bond that pays 7.7% annual interest rate and matures in 15 years. Investors are willing to pay $948 for the bond and TM faces a tax rate of 28%

The after-tax cost of debt is?

(Cost of debt) ABC Corp needs to raise $608,000. It has decided to issue a $1000 par value bond with an annual coupon rate of 7.4% with interest paid semiannually and a 15 year maturity. Investors require a rate of return of 10.2%.

a) compute market value of bond.

b) how many bonds will they have to issue to raise the needed funds.

c) What is the firms after-tax cost of debt if firms tax rate is 34%.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9791651

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