A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $516.97. The company's federal-plus-state tax rate is 25%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to one decimal place. %
A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $516.97. The company's federal-plus-state tax rate is 25%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to one decimal place. %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Bond Yield and After-Tax Cost of Debt
A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $516.97. The company's federal-plus-state tax rate is 25%. What is the firm's after-tax component cost of debt for
purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to one decimal place.
%
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