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Schiffauer Electronics Plans to Issue 10-Year,zero Coupon Bonds with a Par

Question 13

Multiple Choice

Schiffauer Electronics plans to issue 10-year,zero coupon bonds with a par value of $1,000 and a yield to maturity of 9.5%.The company has a tax rate of 30%.How much extra in taxes would the company pay (or save) the second year (at t = 2) if it goes ahead and issues the bonds?


A) $12.59
B) $12.91
C) $13.23
D) $13.56
E) $13.90

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