Question
In: Finance
Several years ago, the ABC Company sold a $1,000 par value bond that now has 20...
Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 8.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company’s tax rate is 30%. What is the after-tax cost of debt? Group of answer choices
Solutions
Expert Solution
Calculating Yield to Maturity,
Using TVM Calculation,
I = [PV = -925, PMT = 40, FV = 1,000, N = 40]
I = 8.80%
After-tax cost of debt = (1 - 0.30)(0.088)
After-tax cost of debt = 6.16%
jeff jeffy answered 3 years agoRelated Solutions
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