Sabine Co has outstanding bonds with 10 years remaining until maturity, a coupon rate of 7%, semi-annual coupon payments, and a market price of 96.5% of par value. If the tax rate is 16%, what is the firm's after-tax cost of debt? Enter your answer as an annualized rate in decimal format, and show four decimal places. For example, if your answer is 5.1%, enter .0510.
Sabine Co has outstanding bonds with 10 years remaining until maturity, a coupon rate of 7%, semi-annual coupon payments, and a market price of 96.5% of par value. If the tax rate is 16%, what is the firm's after-tax cost of debt? Enter your answer as an annualized rate in decimal format, and show four decimal places. For example, if your answer is 5.1%, enter .0510.
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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Sabine Co has outstanding bonds with 10 years remaining until maturity, a coupon rate of 7%, semi-annual coupon payments, and a market price of 96.5% of par value. If the tax rate is 16%, what is the firm's after-tax cost of debt? Enter your answer as an annualized rate in decimal format, and show four decimal places. For example, if your answer is 5.1%, enter .0510.
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