Molex Inc., a manufacturer of cable assemblies for polycrystalline photovoltaic solar modules, requires $3.1 million in debt

Question:

Molex Inc., a manufacturer of cable assemblies for polycrystalline photovoltaic solar modules, requires $3.1 million in debt capital. The company plans to sell 15-year bonds that carry a dividend of 6% per year, payable semiannually. Molex has an effective tax rate of 32% per year. Determine

(a) The nominal annual after-tax cost of debt capital

(b) The effective annual after-tax cost of debt capital.

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...