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Cost of debt LLC International is issuing a $2000 par value bond that pays 8 percent annual interest and matures in 10 years Investors are willing to pay $1800 for the bond Floatation costs will

(Cost of debt) LLC International is issuing a $2,000 par value bond that pays 8 percent annual interest and matures in 10 years. Investors are willing to pay $1,800 for the bond. Floatation costs will be 4 percent of market value. The Company is in a 20 percent tax bracket. What will be the firm’s after-tax cost of debt on the bond?

Apr 27 2020 View more View Less

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