Tom's Ventures has a zero coupon bond issue outstanding that matures in thirteen years. The bonds are selling at 48 percent of par value. The company's tax rate is 34 percent. What is the company's after-tax cost of debt?
A) 3.83 percent
B) 4.11 percent
C) 4.73 percent
D) 4.80 percent
E) 5.81 percent
A
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