Bender
and Co. is issuing a $1,000 par value bond that pays 9% interest
annually. Investors are expected to pay $918 for the 10-year bond.
Bender will have to pay $33 per bond in flotation costs. What is the
cost of debt if the firm is in the 34% tax bracket?
A.
11.95%
B.
9.23%
C.
9.01%
D.
7.23%
A.
11.95%
B.
9.23%
C.
9.01%
D.
7.23%
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