Find the weighted after-tax cost of bonds given the following information:Total Market Value = 500, bond...
Find the weighted after-tax cost of bonds given the following information:Total Market Value = 500, bond market value is 200, Bond interest rate is 4.5%, tax rate is 30%
Homework Answers
Bond Interest Rate = 4.5 % and Tax Rate = 30%
After-Tax Cost of Bonds = 4.5 x (1-0.3) = 3.15 %
NOTE: In the absence of any additional information, the bond's interest rate is assumed to be the bond's cost of debt. The after-tax cost of the bond is calculated using the same value.
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