After-tax cost of debt
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Calculating the Cost of Debt. Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. If the corporate tax rate is 34 percent, what is the after-tax cost of Ying's debt?
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1
5.00%
98
5 years
$10,000,000
2
7.50
109
8 years
45,000,000
3
6.40
94
15 years
35,000,000
4
9.75
115
25 years
45,000,000
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Solution Summary
The expert calculates after tax cost of debt for bonds with different coupon rates and price quotes.
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