alvatron Metals has a bond outstanding with a coupon rate of 6.6 percent and semiannual payments. The bond currently sells for $1,898 and matures in 16 years. The par value is $2,000 and the company's tax rate is 22 percent. What is the company's aftertax cost of debt?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 16P
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alvatron Metals has a bond outstanding with a coupon rate of 6.6 percent and semiannual payments. The bond currently sells for $1,898 and matures in 16 years. The par value is $2,000 and the
company's tax rate is 22 percent. What is the company's aftertax cost of debt?
Transcribed Image Text:alvatron Metals has a bond outstanding with a coupon rate of 6.6 percent and semiannual payments. The bond currently sells for $1,898 and matures in 16 years. The par value is $2,000 and the company's tax rate is 22 percent. What is the company's aftertax cost of debt?
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