A firm offers a 10- year maturity bond with 1000 face value, Financial Management

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A firm offers a 10- year maturity bond with 1000 face value

A firm offers a 10- year maturity bond with $1,000 face value and 5.25% coupon rate. The current market price for the bond is $1025. Selling the bonds costs the firm $48 per share. What is the after-tax cost of this debt, assuming a 34% corporate tax

A 5.56%

B. 3.66%

C. 6.07%

D. 32.11%

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Financial Management: A firm offers a 10- year maturity bond with 1000 face value

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Financial Management: A firm offers a 10- year maturity bond with 1000 face value

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