In the Dell Farm issued a 30-year, 8 percent semiannual bond 7 years ago. The bond currently
Question:
In the Dell Farm issued a 30-year, 8 percent semiannual bond 7 years ago. The bond currently sells for 108 percent of its face value. The company’s tax rate is 35 percent.
(a) What is the pretax cost of debt?
(b) What is the aftertax cost of debt?
(c) Which is more relevant, the pretax or the after cost of debt? Why?
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a The pretax cost of debt is the YTM of the companys bo...View the full answer
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Related Book For
Essentials Of Corporate Finance
ISBN: 9780073405131
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
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