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Mojo Mining has a bond outstanding that sells for $2,201 and matures in 21 years. The...

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Finance

Mojo Mining has a bond outstanding that sells for $2,201 andmatures in 21 years. The bond pays semiannual coupons and has acoupon rate of 7.38 percent. The par value is $2,000. If thecompany's tax rate is 40 percent, what is the aftertax cost ofdebt?

Choices:

3.90%

6.66%

6.22%

3.69%

4.23%

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Transcribed Image Text

Mojo Mining has a bond outstanding that sells for $2,201 andmatures in 21 years. The bond pays semiannual coupons and has acoupon rate of 7.38 percent. The par value is $2,000. If thecompany's tax rate is 40 percent, what is the aftertax cost ofdebt?Choices:3.90%6.66%6.22%3.69%4.23%

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