the coupon rate on an issue of debt is 9% the yield to maturity on this...

Question

Question

the coupon rate on an issue of debt is 9% the yield to maturity on this issue is 12%. the corporate tax rate is 36%

what would be ther approximate after-tax cost of debt for a new issue of bonds

A. 7.68

B. 9.13

C 9.83

D 6.33

Answer 1

Answer #1

After tax cost of Debt Before tax cost of debt*(1-Tax rate) 0.12*(1-0.36) 0.0768 7.68% Answer A

Answer 2

Similar Homework Help Questions

The coupon rate on an issue of debt is 9%. The yield to maturity on this...

The coupon rate on an issue of debt is 9%. The yield to maturity on this issue is 9%. The corporate tax rate is 40%. What would be the approximate after-tax cost of debt for a new issue of bonds? (Round your answer to 2 decimal places.) 6.85% 7.55% 5.40% 4.05%
The coupon rate on an issue of debt is 8%. The yield to maturity on this...

The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 21%. What would be the approximate after-tax cost of debt for a new issue of bonds?
The coupon rate on a debt issue is 6%. If the yield to maturity on the...

The coupon rate on a debt issue is 6%. If the yield to maturity on the debt is 9%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 35%? (Round your answer to 2 decimal places.) 4.50% 7.20% 5.85% 8.00%

The Holmes Company's currently outstanding bonds have a 9% coupon and an 11% yield to maturity....

The Holmes Company's currently outstanding bonds have a 9% coupon and an 11% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is Holmes' after-tax cost of debt? Round your answer to two decimal places. %%
After-Tax Cost of Debt LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 13%. LL belie...

After-Tax Cost of Debt LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 13%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL's after-tax cost of debt? Round your answer to two decimal places.?
The Holmes Company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity....

The Holmes Company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is Holmes' after-tax cost of debt? Round your answer to two decimal places.

After-tax Cost of Debt The Holmes Company's currently outstanding bonds have a 9% coupon and a...

After-tax Cost of Debt The Holmes Company's currently outstanding bonds have a 9% coupon and a 13% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is Holmes's after-tax cost of debt? Round your answer to two decimal places. %
The Holmes Company's currently outstanding bonds have a 7% coupon and a 10% yield to maturity....

The Holmes Company's currently outstanding bonds have a 7% coupon and a 10% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is Holmes' after-tax cost of debt? Round your answer to two decimal places.
The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity....

The Holmes Company's currently outstanding bonds have a 8% coupon and a 14% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Holmes's after-tax cost of debt? Round your answer to two decimal places.

The Holmes Company's currently outstanding bonds have an 8% coupon and a 14% yield to maturity....

The Holmes Company's currently outstanding bonds have an 8% coupon and a 14% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is Holmes' after-tax cost of debt? Round your answer to tw decimal places