Question

DuPont reports in a recent balance sheet $598 million of 5.25 percent notes payable due in 2016.
The company’s income tax rate is approximately 19 percent.
a. Compute the company’s after-tax cost of borrowing on this bond issue stated as a total dollar amount.
b. Compute the company’s after-tax cost of borrowing on this bond issue stated as a percentage of the amount borrowed.
c. Describe briefly the advantage of raising funds by issuing bonds as opposed to stocks.



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  • CreatedApril 17, 2014
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