(Individual or component costs of capital) A bond that has $1,000 par value (face value)...
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(Individual or component costs of capital) A bond that has $1,000 par value (face value) and a contract or coupon interest rate of 9 percent. A new issue would have a flotation cost of 7 percent of the $1,115 market value. The bonds mature in 12 years. The firm's average tax rate is 30 percent and its marginal tax rate is 25 percent. What is the firm's after-tax cost of debt on the bond? Please solve this question and instructions on how by using a BA II Plus calculator. Thank you
(Individual or component costs of capital) A bond that has $1,000 par value (face value) and a contract or coupon interest rate of 9 percent. A new issue would have a flotation cost of 7 percent of the $1,115 market value. The bonds mature in 12 years. The firm's average tax rate is 30 percent and its marginal tax rate is 25 percent. What is the firm's after-tax cost of debt on the bond? Please solve this question and instructions on how by using a BA II Plus calculator. Thank you
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