A company has outstanding 20-year noncallable bonds with a face value of $1,000, an 11% annual coupon,
Question:
A company has outstanding 20-year noncallable bonds with a face value of $1,000, an 11% annual coupon, and a market price of $1,294.54. If the company was to issue new debt, what would be a reasonable estimate of the interest rate on that debt? If the company’s tax rate is 25%, what is its after-tax cost of debt?
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Step by Step Answer:
To determine a reasonable estimate of the interest rate on new debt we can use the yieldtomaturity Y...View the full answer
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Related Book For 
Fundamentals Of Financial Management
ISBN: 9780357517574
16th Edition
Authors: Eugene F. Brigham, Joel F. Houston
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