Rex Ltd issued R30m of corporate bonds a year ago at the then ruling market yield of
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Rex Ltd issued R30m of corporate bonds a year ago at the then ruling market yield of 11% per year. Interest rates have fallen to 9% and the company wishes to determine the cost of debt for the purposes of determining the firm's cost of capital. The corporate tax rate is 28%. Which interest rate should the firm use? Explain why. What is the market value of the bonds today if the bonds are redeemable in five years' time?
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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