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7 years ago
Tangshan Mining is considering issuing long-term debt. The debt would have a 30 year maturity and a 12 percent coupon rate and make semiannual coupon payments. In order to sell the issue, the bonds must be underpriced at a discount of 2.5 percent of face value. In addition, the firm would have to pay flotation costs of 2.5 percent of face value. The firm's tax rate is 33 percent. Given this information, the after-tax cost of debt for Tangshan Mining would be ________.
A) 6.38%
B) 12.76%
C) 4.98%
D) 8.48%
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
Authors:
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donnabandonnaban
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mantparn Author
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7 years ago
Whoa I needed this Smiling Face with Open Mouth
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6 years ago
thanks
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Thank you
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awesome
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Thanks
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thanks
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3 years ago
2.   Tangshan Mining is considering issuing long-term debt. The debt would have a 30 year maturity and a 12 percent coupon rate and make semiannual coupon payments. In order to sell the issue, the bonds must be underpriced at a discount of 2.5 percent of face value. In addition, the firm would have to pay flotation costs of 2.5 percent of face value. The firm's tax rate is 33 percent. Given this information, what is the after tax cost of debt for Tangshan Mining?
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#9
3 years ago
Thank you
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