Ezally Corp. is investing in a new machine that will be financed by issuing new 25-year, $1,000 par, 6% semiannual coupon bonds. The bonds are currently selling in the market for $980. Flotation costs on newly issued bonds are $80. The corporation’s marginal tax rate is 35%. What is the post-tax cost of debt for the newly-issued bonds?

Describe and interpret the assumptions related to the problem.
(ii) Apply the appropriate mathematical model to solve the problem.
(iii) Calculate the correct solution to the problem. Submit all answers as percentages and round to two decimal places

Answer rating: 100% (QA)

2 Par Value 1000 Semi Annual coupon CouponPar Value2 6... View the full answer