You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 7.0 percent coupon bonds are selling at a price of $856.71. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions.

Current YTM for the bonds 8.80%

What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)

Answer rating: 100% (QA)

We can solve this problem by following these steps Calculate the semiannual coupon Annual coupon rat... View the full answer