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Question
Use the following information to answer the following question(s).The current market price of an existing debt issue is $1,125. The bonds have a $1,000 par value, pay interest annually at a 12% coupon rate, and mature in 10 years. The firm has a marginal tax rate of 34%.
The after-tax cost of this debt issue is:
A) 7.92%.
B) 6.58%.
C) 12%.
D) 3.39%.
Answer
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Related questions
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