Homework Answers
FV = 1000
PV = 1153.72
Nper = 15 * 2 = 30
PMT = 1000 * 12% / 2 = 60
Interest rate can be calculated by using the following excel
formula:
=RATE(nper,pmt,pv,fv)
=RATE(30,60,-1153.72,1000)* 2
= 0.10 or 10%
After tax cost of debt = 10% * (1 - 35%) = 0.065 or 6.5%
Market interest rate on Coleman's debt = 0.065
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