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.
Please see the attached file
The approximate formula is
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 ...
The solution explains how to calculate the cost of debt using the approximation formula