This is a preview of an assignment submited on our website by a student. If you need help with this question or any assignment help, click on the order button below and get started. We guarantee quality, 100% plagiarism free work or your money back.
A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $925. If the corporation sells more bonds it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital?