Suppose a company will issue new 10-year debt with a par value of $1,000, and...
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Suppose a company will issue new 10-year debt with a par value of $1,000, and a coupon rate of 7.5%, paid annually. The tax rate is 30%. If the flotation cost is 2% of the issue proceeds, what are the present value and after-tax cost of debt? $1000 and 5.52% $1000 and 7.50% 0 $ $980 and 7.50% $980 and 5.52%
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