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…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 14P

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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 bond is $1,000 (the bond is selling for its face or par value) and the tax rate is 40%, what is the after-tax cost of debt? [Hint: Recall that the after- tax cost of debt = before-tax cost times (1 - tax %3D rate).] O 3.87% O4.19% 4.95% O4.41% 4.78%
Inventive Response has bonds outstanding that mature in 8.5 years, have a 4 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,180.30. What is the company’s after-tax cost of debt if its tax rate is 21 percent? 1.35 percent 1.70 percent 2.15 percent 2.65 percent 3.40 percent
A company has outstanding long-term bonds with a face value of$1,000, a 10% coupon rate, 25 years remaining until maturity, anda current market value of $1,214.82. If it pays interest semiannually,then what is the nominal annual pre-tax required rate of return ondebt? (8%) If the company’s tax rate is 40%, what is the after-taxcost of debt? (4.8%)
Jiminy's Cricket Farm issued six years ago a 30-year $1000 face value bond with an 8 percent annual coupon rate that has semiannual payments. The bond currently sells for $1,140. What is the after-tax cost of debt if the company's tax rate is 35 percent? O 4.425% 4.145% 4.955% 5.065%
1) Your firm wishes to issue a 20-year bond, an annual coupon of 6%, and the price has been determined to be RM880. The floatation cost of the issuance is 2% of the selling price. The tax rate is 24%. a) The net selling price is RM________. b) Annual YTM is ________% c) After tax cost of debt is ______% Answer by using formula not a Excel don't use chatgpt
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The outstanding debt of Berstin Corp. has ten years to maturity, a current yield of 6%, and a price of $80. What is the pretax cost of debt if the tax rate is 30%. Note: The current yield of a bond is its annual coupon divided by its price. A. 4.65% B. 6% OC. 6.2% OD. 7.75%
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