You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity,
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Question:
You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 10.75 percent coupon bonds are selling at a price of $901.34. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm.
What is the current YTM of the bonds?(Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
The current YTM for the bonds
What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate?(Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
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