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(Answered) Cost of Debt Capital


A corporate bond has a face value of $1,000 and a coupon rate of 6.5%. The bond matures in 10 years and has a current market price of $985. If the corporation sells more bonds it will incur flotation costs of $36 per bond. If the corporate tax rate is 34%, what is the after-tax cost of debt capital?;a) 5.71%;b) 5.45%;c) 5.18%;d) 4.78%;e) 5.89%
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Cost of Debt Capital

 


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