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Cold Duck Brewing Company can issue a 25-year debt security that pays an annual coupon...

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Accounting

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Cold Duck Brewing Company can issue a 25-year debt security that pays an annual coupon payment of $75. The bond carries a par value of $1,000 and is currently trading at par. Based on this information, determine the after-tax cost of Cold Duck's debt if the firm's marginal federal-plus-state tax rate is 30%. Cold Duck Brewing Company's after-tax cost of debt (rounded to four decimal places) is: 0 4.2000% o 4.9875% O 5.250090 O 4.462590 Cold Duck's CFO has pointed out that if these new bonds are issued, the company will incur a flotation cost of 2%. Remember, these flotation costs will be bonds. Calculate the company's after-ta added from the proceeds the firm receives from the sale of its new et of the issue's flotation costs subtracted If Cold Duck issues its new bonds and incurs flotation costs of 2%, then its adjusted (net) after-tax cost of debt (rounded to four decimal places) will be 0 4.9875% o 5.5125% 0 5.3976% O 6.037590

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