Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. Bond 1 2 3 4 Coupon Rate 8.90% 6.40 8.60 9.10 Price Quote 105.9 94.5 104.7 94.5 Maturity 3 years 6 years. 13.5 years 23 years If the corporate tax rate is 24 percent, what is the aftertax cost of the company's debt?
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. Bond 1 2 3 4 Coupon Rate 8.90% 6.40 8.60 9.10 Price Quote 105.9 94.5 104.7 94.5 Maturity 3 years 6 years. 13.5 years 23 years If the corporate tax rate is 24 percent, what is the aftertax cost of the company's debt?
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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![Problem 12-22 Calculating the Cost of Debt [LO2]
Ying Import has several bond issues outstanding, each making semiannual interest
payments. The bonds are listed in the table below.
Bond
1
2
3
Coupon Rate
8.90%
Aftertax cost of debt
6.40
8.60
9.10
Price Quote
105.9
94.5
%
104.7
94.5
If the corporate tax rate is 24 percent, what is the aftertax cost of the company's
debt?
Note: Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.
Maturity
3 years
6 years
13.5 years
23 years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F483c3d17-1621-47af-bfd2-86acecf64938%2F496519c8-7bcf-4c3b-b9c3-94a1fd977539%2Fo04cqd_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 12-22 Calculating the Cost of Debt [LO2]
Ying Import has several bond issues outstanding, each making semiannual interest
payments. The bonds are listed in the table below.
Bond
1
2
3
Coupon Rate
8.90%
Aftertax cost of debt
6.40
8.60
9.10
Price Quote
105.9
94.5
%
104.7
94.5
If the corporate tax rate is 24 percent, what is the aftertax cost of the company's
debt?
Note: Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.
Maturity
3 years
6 years
13.5 years
23 years
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