A $1,000 par bond is currently selling for $1,100. It has a 9% coupon
A $1,000 par bond is currently selling for $1,100. It has a 9% coupon rate, fifteen years remaining to maturity, and pays interest semi-annually. If the firm’s tax rate is 35%, what is the after-tax cost of debt?
A) 9.00%
B) 7.84%
C) 6.07%
D) 5.85%
E) 5.10%
ANSWER
E
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