Question

A company has a semiannual bond with seven years to maturity that priced at $1,080. The...

A company has a semiannual bond with seven years to maturity that priced at $1,080. The coupon rate is 6%. Taxes are 40%. Use the YTM from chapter 6. Solve for the semiannual rate, then multiply by 2 to convert to annual. Finally, adjust for the tax rate.



Requirement 2:

What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

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