Calculate the annual after-tax cost (in dollars) of debt

Question: Calculate the annual after-tax cost (in dollars) o…

 

Calculate the annual after-tax cost (in dollars) of debt given the following information:

 

  • The firm has 20,000 bonds issued, each with $1,000 par value. (Recall that the coupon interest paid is equal to the par value times the coupon rate.)

 

  • The coupon rate paid on the bonds is 5%. (This is the interest expense on the bonds.)

 

  • The corporate tax rate is 35%.

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jagguarpaw January 16, 2017 0 Comments