Exotic Fishing Expeditions has $1000 par value bonds currently quoted at 90 percent, with 15 years to maturity. The issue makes semiannual payments and has an annual coupon rate of 8.5 percent. What is the firm's aftertax cost of debt, assuming a tax rate of 20 percent?
Exotic Fishing Expeditions has $1000 par value bonds currently quoted at 90 percent, with 15 years to maturity. The issue makes semiannual payments and has an annual coupon rate of 8.5 percent. What is the firm's aftertax cost of debt, assuming a tax rate of 20 percent?
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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Transcribed Image Text:Exotic Fishing Expeditions has $1000 par value bonds currently quoted at 90 percent, with 15 years to maturity. The issue
makes semiannual payments and has an annual coupon rate of 8.5 percent. What is the firm's aftertax cost of debt, assuming a
tax rate of 20 percent?
7.83%
B 7.44%
C) 9.79%
D 7.05%
E 8.22%
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