Calculating aftertax cost of debt


A semiannual, 6 percent bond matures in 14 years and has a face value of $1,000. The market quote on this bond is 1,027. What is the aftertax cost of debt if the tax rate is 34 percent?

3.55 percent

5.58 percent

3.77 percent

6.16 percent

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Finance Basics: Calculating aftertax cost of debt
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