Simple Foods has a zero coupon bond issue outstanding that matures at nine years. The bonds are selling at 42% of par value. What is the company's after tax cost of debt if the tax rate is 38%? (Use semi annual compounding)
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Simple Foods has a zero coupon bond issue outstanding that matures at nine years. The bonds are selling at 42% of par value. What is the company's after tax cost of debt if the tax rate is 38%? (Use semi annual compounding)
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