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Find annual after-tax cost of debt to company on issue

Claus & Co. is planning a zero coupon bond issue that hasa par value of $1,000 and matures in 2 years. The bonds willbe sold today at a price of $826.45. If the firm'smarginal tax rate is 40%, what is the annual after-tax cost of debtto the company on this issue?

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Finance Basics: Find annual after-tax cost of debt to company on issue

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Find annual after-tax cost of debt to company on issue

Reference No:- TGS0675772

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

Q : How to calculate the ending inventory

Q : What is the bond carrying value reported

Q : How much is the firm-s net working capital

Q : What is effective interest rate established by the market

Q : Find annual after-tax cost of debt to company on issue

Q : What is the process inventory

Q : What is the net carrying value of the lease liability

Q : Prepare the entry to correct the depreciation

Q : Possible future consequences to individuals and society

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Find annual after-tax cost of debt to company on issue

Reference No:- TGS0675772

Recent Questions Asked Finance Basics

Q : How to calculate the ending inventory

Q : What is the bond carrying value reported

Q : How much is the firm-s net working capital

Q : What is effective interest rate established by the market

Q : Find annual after-tax cost of debt to company on issue

Q : What is the process inventory

Q : What is the net carrying value of the lease liability

Q : Prepare the entry to correct the depreciation

Q : Possible future consequences to individuals and society

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