You know that the after-tax cost of debt capital for Bubbles Champagne is 5.20 percent. Assume that the firm has only one issue of five-year bonds outstanding. The bonds make semiannual coupon payments and the marginal tax rate is 30 percent.
Calculate Pre-tax cost of debt capital. (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)
Pre-tax cost of debt capital
(b) What is the current price of the bonds if the coupon rate on those bonds is 7.43 percent?
Current price of the bonds $