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13.3 Current cost of a bond: You are analyzing the cost of debt for a firm.You know that the firm’s. 1 answer below » 13.3 Current cost of a bond: You are analyzing the cost of debt for a firm.You know that the firm’s 14-year maturity, 8.5 percent coupon bonds are selling at a price of $823.48. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, what is the after-tax cost of debt for this firm if the firm is in the 30 percent marginal tax rate? Maturity (years) 14 Coupon rate 8.50% Bond price $823.48 Coupon frequency (per year) 2 Firm’s tax rate 30% View complete question » 13.3 Current cost of a bond: You are analyzing the cost of debt for a firm.You know that the firm’s 14-year maturity, 8.5 percent coupon bonds are selling at a price of $823.48. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, what is the after-tax cost of debt for this firm if the firm is in the 30 percent marginal tax rate? Maturity (years) 14 Coupon rate 8.50% Bond price $823.48 Coupon frequency (per year) 2 Firm’s tax rate 30% Before-tax cost of debt (semi-annual) 4.00% Before-tax cost of debt (annualized) After-tax cost of debt (annualized) View less » Oct 23 2015 10:48 PM
