McQuinty, Inc. has a beta of 1.34 and a marginal tax rate of 31%. The company has one bond issue outstanding with a total face value of $750,000. The bonds are currently quoted at 98.6. These bonds have seven years to maturity, a 6 % coupon rate, and pay interest semi-annually. What is the after-tax cost of debt for McQuinty, Inc.? Multiple Choice O O O O 4.31% 5.55% 5.16% 6.25% 4.14%

Essentials Of Investments
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Chapter1: Investments: Background And Issues
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McQuinty, Inc. has a beta of 1.34 and a marginal tax rate of 31%. The company has one bond issue outstanding with a total face value of $750,000. The bonds
are currently quoted at 98.6. These bonds have seven years to maturity, a 6% coupon rate, and pay interest semi-annually. What is the after-tax cost of debt
for McQuinty, Inc.?
Multiple Choice
O
O
O
4.31%
5.55%
5.16%
6.25%
4.14%
Transcribed Image Text:McQuinty, Inc. has a beta of 1.34 and a marginal tax rate of 31%. The company has one bond issue outstanding with a total face value of $750,000. The bonds are currently quoted at 98.6. These bonds have seven years to maturity, a 6% coupon rate, and pay interest semi-annually. What is the after-tax cost of debt for McQuinty, Inc.? Multiple Choice O O O 4.31% 5.55% 5.16% 6.25% 4.14%
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