A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years
and has a current market price of $925. If the corporation sells more bonds, it will incur flotation
costs of $25 per bond.
If the corporate tax rate is 35%, what is the after-tax cost of debt capital?
A) 3.74% B) 5.29% C) 6.78% D) 4.45%
A
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A) Blogging B) Podcasting C) Information sharing sites D) Social networks E) Wikis
Using MACRS depreciation for tax purposes and straight-line depreciation for book purposes will affect after-tax cash flows during the life of a project
Indicate whether the statement is true or false