On January 1, Year 1, Brown Co. issued bonds with a face value of $115,000, a...
On January 1, Year 1, Brown Co. issued bonds with a face value of $115,000, a stated rate of interest of 10%, and a 20-year term to maturity. The bonds were issued at face value. If Bluefield's tax rate is 40%, what is the after-tax cost of borrowing related to these bonds for Year 1?
Homework Answers
| Annual interest | 11500 | =115000*10% |
| Less: Tax savings | 4600 | =11500*40% |
| After-tax cost of borrowing | 6900 |
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On January 1, Year 1, Brown Co. issued bonds with a face value
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