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papahomer papahomer
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6 years ago
The George Company, Inc., has two issues of debt. Issue A has a maturity value of 8 million dollars, a coupon rate of 8%, paid annually, and is selling at par. Issue B was issued as a 15 year bond 5 years ago. Its coupon rate is 9%, paid annually. Investors demand a pre-tax return of 9.3% on this bond. The maturity value of Issue B is 6 million dollars. The George company has a marginal tax rate of 35%. What is the company's after tax cost of debt?
A) 4.73%
B) 5.56%
C) 7.36%
D) 8.47%
Textbook 
Financial Management: Principles and Applications

Financial Management: Principles and Applications


Edition: 13th
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David_hessDavid_hess
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6 years ago
You make an excellent tutor!
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I appreciate what you did here, answered it right Smiling Face with Open Mouth
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