Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. The bond currently sells for $1,905 and matures in15 years. The par value is $2,000 and the company's tax rate is 21 percent. What is the company's aftertax cost of debt?Multiple Choice3.89%3.51%5.54%3.27%4.46%

After-tax cost of debt refers to the cost that is being incurred over the borrowed amount by the…

Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. The bond currently sells for $1,905 and matures 15 years. The par value is $2,000 and the company's tax rate is 21 percent. What is the company's aftertax cost of debt? Multiple Choice О 3.89% О 3.51% о 5.54%

Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. The bond currently sells for $1,905 and matures 15 years. The par value is $2,000 and the company's tax rate is 21 percent. What is the company's aftertax cost of debt? Multiple Choice О 3.89% О 3.51% о 5.54%

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 9P: Bond Yield and After-Tax Cost of Debt A companys 6% coupon rate, semiannual payment, 1,000 par value...

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Question

Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. The bond currently sells for $1,905 and matures in
15 years. The par value is $2,000 and the company's tax rate is 21 percent. What is the company's aftertax cost of debt?
Multiple Choice
3.89%
3.51%
5.54%
3.27%
4.46%

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