Question: Belton Distribution Company is issuing a 1 000 par value bond
Belton Distribution Company is issuing a $1,000 par value bond that pays 7 percent annual interest that is paid semiannually and matures in 15 years. Investors are willing to pay $958 for the bond. The company is in the 18 percent marginal tax bracket. What is the firm’s after-tax cost of debt on the bond?
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