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borteleto borteleto
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5 years ago
A company is going to issue a $1,000 par value bond that pays a 7% annual coupon. The company expects investors to pay $942 for the 20-year bond. The expected flotation cost per bond is $42, and the firm is in the 34% tax bracket. Compute the following:
a.the yield to maturity on the firm's bonds
b.the firm's after-tax cost of existing debt
c.the firm's after-tax cost of new debt
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Foundations of Finance

Foundations of Finance


Edition: 9th
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Marc18Marc18
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