In March of 2020 PepsiCo, Inc. (PEP) sold $750 million worth of 30-year 5.50% coupon bonds...

 

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In March of 2020 PepsiCo, Inc. (PEP) sold $750 million worth of 30-year 5.50% coupon bonds that pay semi-annual interest. At the time the bonds were issued, the market paid $993.62 per bond and the flotation cost was $17.58 per bond. Pepsi's corporate tax rate is 21%. a. Ignoring flotation costs, what is Pepsi's before-tax and after-tax costs of debt? b. Considering flotation costs, what is Pepsi's before-tax and after-tax costs of debt? ***** a. Ignoring flotation cost, Pepsi's before-tax cost of debt is %. (Round to two decimal places.) In March of 2020 PepsiCo, Inc. (PEP) sold $750 million worth of 30-year 5.50% coupon bonds that pay semi-annual interest. At the time the bonds were issued, the market paid $993.62 per bond and the flotation cost was $17.58 per bond. Pepsi's corporate tax rate is 21%. a. Ignoring flotation costs, what is Pepsi's before-tax and after-tax costs of debt? b. Considering flotation costs, what is Pepsi's before-tax and after-tax costs of debt? ***** a. Ignoring flotation cost, Pepsi's before-tax cost of debt is %. (Round to two decimal places.)

Answer rating: 100% (QA)

Ignoring flotation costs what is Pepsis beforetax and aftertax costs of debt The beforetax cost of debt is 550 and the aftertax cost ... View the full answer