A firm sold a 10-year bond issue 3 years ago. The bond has a 6.45% annual coupon and a $1,000face value. If the current market price of the bong is $951.64 and the tax rate is 35%, what is the after-tax cost of debt?O 4.64%O 4.19%O 4.95%O 4.41%O 4.78%

Face value (F) = $1000 Coupon payment (C) = 6.45% of $1000 = $64.5 Current market price (P0) =…

Answered: A firm sold a 10-year bond issue 3…

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

Problem 1PS

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A firm sold a 10-year bond issue 3 years ago. The bond has a 6.45% annual coupon and a $1,000 face value. If the current market price of the bong is $951.64 and the tax rate is 35%, what is the after- tax cost of debt? O 4.64% O 4.19% O 4.95% O 4.41% O 4.78%