You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.6 percent coupon bonds are selling at a price of $849.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. What is the current YTM of the bonds? (round intermediate calculations to 4 decimal places, and final answer to 0 decimal places) What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)

You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.6 percent coupon bonds are selling at a price of $849.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. What is the current YTM of the bonds? (round intermediate calculations to 4 decimal places, and final answer to 0 decimal places) What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 16P

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