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XYZ Co. issues $1,000 par value, 5.6% annual coupon bonds, with 15 years to maturity. The company sells the bonds for $699. Find the after-tax cost of debt assuming a tax rate of 35 %. 3.55% 4.73% 6.13% 4.30%

XYZ Co. issues $1,000 par value, 5.6% annual coupon bonds, with 15 years to maturity. The company sells the bonds for $699. Find the after-tax cost of debt assuming a tax rate of 35 %. 3.55% 4.73% 6.13% 4.30%

Essentials Of Investments
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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XYZ Co. issues $1,000 par value, 5.6% annual coupon bonds, with 15 years to maturity. The company sells the bonds for $699. Find the after-tax cost of debt assuming a tax rate of 35 %. 3.55% 4.73% 6.13% 4.30%
Transcribed Image Text:XYZ Co. issues $1,000 par value, 5.6% annual coupon bonds, with 15 years to maturity. The company sells the bonds for $699. Find the after-tax cost of debt assuming a tax rate of 35 %. 3.55% 4.73% 6.13% 4.30%
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