Question

gilbert inc. has bonds outstanding that were issued 5 years ago with an original maturity of...

gilbert inc. has bonds outstanding that were issued 5 years ago with an original maturity of 20 years. these pay interest semiannually, and have a fixed coupon of 8.00%. today, each $1000 face value bond is selling for $1030. gilbert’s marginal tax rate is 25%. assuming gilbert would like to issue new bonds today that have the same remaining maturity as their existing bonds, we can estimate gilbert’s pre-tax marginal cost of debt to be:
7.66%
7.97%
6.49%
6.73%
7.08%

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Answer #1

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