Problem $1$

Pinnacle Corp. has issued $2,500$ debentures with a total principal value of $$2,500,000.$ The bonds have a coupon rate of $7\%.$

a$.$ What dollar amount of interest per bond can an investor expect to receive each year from Pinnacle?

b$.$ What is Pinnacle's total interest expense per year associated with this bond issue?

c$.$ Assuming that Pinnacle is in a $35\%$ corporate tax bracket, what is the company's net after$-$tax interest cost associated with this

bond issue?

Answers $($insert your answers in the highlighted cells; use cell references, equations, and functions wherever possible$)$

a$.$

Dollar amount of interest per bond

b$.$

Total interest expense per year

c$.$

Net after$-$tax interest cost