Dewe, Cheatum and Howe is going to issue 20,000, 5 year bonds with a par value of $1,000 each. The coupon rate will be 6% paid semi-annually. The market price per bond at issue is $975 dollars and the cost to issue the bonds is $25 per bond. The tax rate is 20% 

a) How much money will Dewe, Cheatum and Howe raise

b) How much will Dewe Cheatum and Howe pay the investment banker

c) What is pre-tax yield to the investor

d) What is the pre-tax cost of debt to Dewe, Cheatum and Howe

e) What is the after-tax cost of debt to Dewe, Cheatum and Howe

Answer rating: 100% (QA)

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