Problem 36 Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years,...
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Accounting
Problem 36
Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate of 3.2% and a yield to maturity of 5.4%.
Simple Corp.'s average tax rate is 18% and its marginal tax rate is 30%.
Attempt 1/3 for 10 pts.
Part 1
What is the (pre-tax) cost of debt?
Part 2
What is the after-tax cost of debt?
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