Gibson Industries is issuing a $1,000 par value bond with an 8% annual interest coupon rate that matures in 11 years. Investors are willing to pay $972, and flotation costs will be 9%. Gibson is in the 34% tax bracket. What will be the after-tax cost of new debt for the bond?

Answer rating: 100% (QA)

To find the aftertax cost of new debt for the bond we need to consider the flotation costs and the t... View the full answer