Finding aftertax cost of debt
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Ponderosa co. bonds sells for $846.04. The coupon rate is 8 percent and the bonds mature in 25 years. Interest is paid semi-annually and the firm's tax rate is 34 percent. What is the aftertax cost of debt?
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Solution describes the steps for finding aftertax cost of debt.
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Solution :
Semi annual coupon payment = 80/2=4
Period Cash Flow
0 -864.04
1 40
2 40
3 40
4 40
5 40
6 40
7 40
8 ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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