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Carraway Seed Company is issuing a $1,000 par value bond that pays 7 percent annual...

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Question

Finance

Carraway Seed Company is issuing a

$1,000

par value bond that pays

7

percent annual interest and matures in

11

years. Investors are willing to pay

$975

for the bond. Flotation costs will be

9

percent of market value. The company is in a

39

percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

The firm's after-tax cost of debt on the bond will be

nothing%.

(Round to two decimal places.)

Answer & Explanation Solved by verified expert
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