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  4. Curtis Ltd issued 100 000 of 8 bonds at face value

Curtis Ltd issued 100 000 of 8 bonds at face value

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Curtis Ltd. issued $100,000 of 8% bonds at face value on October 1, 2014. Interest is paid each March 31 and September 30. If Curtis’s tax rate is 40%, what is the annual after-tax borrowing cost?
(a) In percentage terms and
(b) In dollars?

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