Micro spinoffs inc issued 10-year debt a year ago at par


Micro Spinoffs, Inc., issued 10-year debt a year ago at par value with a coupon rate of 9%, paid annually. Today, the debt is selling at $1,360. If the firm’s tax bracket is 35%, what is its after-tax cost of debt?

After-tax cost of debt: 

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Financial Management: Micro spinoffs inc issued 10-year debt a year ago at par
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