The approximate after-tax cost of debt for a 20-year, 7 percent, $1,000 par value bond selling...

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Finance

The approximate after-tax cost of debt for a 20-year, 7 percent,$1,000 par value bond selling at $960 (assume a marginal tax rateof 40 percent) is
Select one:
a. 4.41 percent.
b. 5.15 percent.
c. 7 percent.
d. 7.35 percent.

Answer & Explanation Solved by verified expert

4.3 Ratings (854 Votes)

Solution The formula for calculating the cost of debt of a bond is C F P N F P 2 Where C Annual coupon F Face value of the bond P Market price of the See Answer

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The approximate after-tax cost of debt for a 20-year, 7 percent, $1,000 par value bond selling...

70.2K

Verified Solution

Question

Finance

The approximate after-tax cost of debt for a 20-year, 7 percent,$1,000 par value bond selling at $960 (assume a marginal tax rateof 40 percent) is
Select one:
a. 4.41 percent.
b. 5.15 percent.
c. 7 percent.
d. 7.35 percent.

Answer & Explanation Solved by verified expert

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The approximate after-tax cost of debt for a 20-year, 7 percent, $1,000 par value bond selling...

70.2K

Verified Solution

Question

Finance

The approximate after-tax cost of debt for a 20-year, 7 percent,$1,000 par value bond selling at $960 (assume a marginal tax rateof 40 percent) isSelect one:a. 4.41 percent.b. 5.15 percent.c. 7 percent.d. 7.35 percent.

Answer & Explanation Solved by verified expert

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Transcribed Image Text

Other questions asked by students

The approximate after-tax cost of debt for a 20-year, 7 percent,$1,000 par value bond selling at $960 (assume a marginal tax rateof 40 percent) is
Select one:
a. 4.41 percent.
b. 5.15 percent.
c. 7 percent.
d. 7.35 percent.