Question: A company has outstanding 20-year non-callable bonds with a face value of $1,000, an 11% annual coupon, and a market price of $1,294.54. If the

A company has outstanding 20-year non-callable bonds with a of $1,000, an 11% annual 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 40%, what is its after-tax cost of debt?
Why isn't the rate a reasonable estimate of the interest rate?

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