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Cost of debt using the approximation formula

For each of the $1000 par-value bonds in the attached file, assuming annual interest payment and a 40% taxe rate, calculate the after-tax cost to maturity using the approximation formula.

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Please see the attached file

The approximate formula is

Where
I is the interest
Nd is par value +/- discount or premium - underwriting fee
n is the number of years to maturity

After tax cost ki ...

Solution Summary

The solution explains how to calculate the cost of debt using the approximation formula

$2.19