A corporate bond has a face value of RM1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of RM925. If the corporation sells more bonds it will incur flotation costs of RM25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital?

Answer rating: 100% (QA)

Cost of debt after tax Cost of debt after tax C NP RV N NP RV 2 where C coupon interest after tax NP ... View the full answer