Multiple Choice
A corporate bond has a face value of $1,000 and a coupon rate of 9%.The bond matures in 14 years and has a current market price of $946.If the corporation sells more bonds,it will incur flotation costs of $26 per bond.If the corporate tax rate is 35%,what is the after-tax cost of debt capital?
A) 5.57%
B) 6.56%
C) 8.18%
D) 7.31%
Correct Answer:
Verified
Correct Answer:
Verified
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