Question: A firm can issue $ 1 , 0 0 0 par value bond that pays $ 1 0 0 per year in interest at a

A firm can issue $1,000 par value bond that pays $100 per year in interest at a price of $980. The bond will have a 5-year life. The firm is in a 35% tax bracket. What is the after tax cost of debt?
A.10.53%
B.10.20%
C.6.85%
D.6.50%
A firm can issue $1,000 par value bond that pays $100

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