You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 9.25 percent semiannual coupon bonds are selling at a price of $958.98. If these bonds are the only debt outstanding for the firm.
What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
After-tax cost of debt