The Sweeney Paper Company is planning to sell $10 million worth of long term bonds with an 11 interest rate The company believes that it can sell the $ 1,000 par value bonds at a price that will provide a yield to maturity of 13 to its investors The flotation costs will be 1 9 If Sweeney 's margina...

To provide a yield to maturity of 13 to the bond investors the bond offering price sh ...

The Sweeney Paper Company is planning to sell $10 million worth of long-term bonds with an 11%

Question:

The Sweeney Paper Company is planning to sell $10 million worth of long-term bonds with an 11% interest rate. The company believes that it can sell the $ 1,000 bonds at a price that will provide a yield to of 13% to its investors. The flotation costs will be 1.9%. If Sweeney's marginal tax rate is 35%, what is its annual after-tax cost of debt?
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...