Question: Temple Midland Inc is issuing a 1 000 par value bond that
Temple-Midland, Inc. is issuing a $1,000 par value bond that pays 8 percent annual interest and matures in 15 years. Investors are willing to pay $950 for the bond and Temple faces a tax rate of 35 percent. What is Temple’s after-tax cost of debt on the bond where interest is paid semiannually?
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