Suppose that a firm has a debt issue outstanding with eight years to maturity that is quoted at 116.5 percent of face value. If the issue makes semiannual payments and is currently trading at a YTM of 8.4 percent. If the company’s tax rate is 35 percent, what is its after-tax cost of debt?

Answer rating: 100% (QA)

To calculate the aftertax cost of debt we first need to calculate the Yield to Maturity YTM in term... View the full answer