Coneheads Haberdashery plans to issue a new bond with a coupon rate of interest equal...
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Finance
Coneheads Haberdashery plans to issue a new bond with a coupon rate of interest equal to the yield of its existing bond, which was issued five years ago. The existing bond has a coupon rate of interest equal to 8 percent, 15 years remaining until maturity, an face value equal to $1,000. Interest is paid semiannually. The market value of the existing bond is $1,196. What is Coneheads' before-tax of debt? Coneheads' marginal tax rate is 35 percent.
a. 6.69%
b. 6.00%
c. 8.00%
d. 5.98%
e. 3.00%
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