Ying Import has several bond issues outstanding, each making semiannual interestpayments. The bonds are listed in the following table.CouponBond RatePrice QuoteMaturityFace Value$15.7%105.465 years53,000,0002347.3114.228 years48,000,0007.2112.7715.5 years68,000,0006.5102.0125 years75,000,000If the corporate tax rate is 23 percent, what is the aftertax cost of the company's debt?(Do not round intermediate calculations and enter your answer as a percent roundedto 2 decimal places, e.g., 32.16.)Cost of debt%

The cost of debt denotes the actual rate at which a company compensates for its borrowed capital,…

Answered: f the corporate tax rate is 23 percent,…

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f the corporate tax rate is 23 percent, what is the aftertax cost of the company's debt?

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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Question

Ying Import has several bond issues outstanding, each making semiannual interest
payments. The bonds are listed in the following table.
Coupon
Bond Rate
Price Quote
Maturity
Face Value
$
1
5.7%
105.46
5 years
53,000,000
234
7.3
114.22
8 years
48,000,000
7.2
112.77
15.5 years
68,000,000
6.5
102.01
25 years
75,000,000
If the corporate tax rate is 23 percent, what is the aftertax cost of the company's debt?
(Do not round intermediate calculations and enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
Cost of debt
%

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