Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. The bond currently sells for $951 and matures in 23 years. The par value is $1,000 and the company's tax rate is 35 percent. What is the company's aftertax cost of debt?
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Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments. The bond currently sells for $951 and matures in 23 years. The par value is $1,000 and the company's tax rate is 35 percent. What is the company's aftertax cost of debt?
Cost of debt is the YTM of the bond.
Hence after tax cost of debt is the YTM after adjusting for the tax rate.
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