Target has a corporate bond rated BBB by S&P. Assume the marginal tax rate is 40% and
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Question:
Target has a corporate bond rated BBB by S&P. Assume the marginal tax rate is 40% and the risk-free rate is 1.6%.
What is the post-tax cost of the bond based on the following table?
Investment Grade
AAA 0.46%
AA 0.57%
A+ 0.79%
A 0.86%
A- 1.17%
BBB+ 1.44%
BBB 1.90%
BBB- 2.38%
JUNK Bond
BB+ 3.77%
BB 4.32%
BB- 4.38%
B+ 4.61%
B 5.60%
B- 6.08%
Related Book For
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
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