Question

Problem 14-22 Calculating the Cost of Debt [LO2]

Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table.

Bond		Coupon Rate				Price Quote				Maturity			Face Value
1			5.5	%			105.26			5	years		$	55,000,000
2			7.1				114.02			8	years			50,000,000
3			7.0				112.57			15.5	years			70,000,000
4			6.3				101.81			25	years			77,000,000

If the corporate tax rate is 25 percent, what is the aftertax cost of the company’s debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1