Net cost of the call premium
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Buchanan Corp. is refunding $12 million worth of 10% debt. The corporation's tax rate is 35%. The call premium is 9%. What is the net cost of the call premium? Please show ALL work of how the answer was composed.
A) $390,000
B)$1,080,000
C)$600,000
D) $702,000
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Solution Summary
The solution explains how to calculate the net cost of the call premium.
Solution Preview
The call premium = 12,000,000 X 9% = $1,080,000
This is the amount ...
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