LL Incorporated’s currently outstanding 11% coupon bonds have a yieldto maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what isLL’s after-tax cost of debt?
LL Incorporated’s currently outstanding 11% coupon bonds have a yieldto maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what isLL’s after-tax cost of debt?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 2P
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LL Incorporated’s currently outstanding 11% coupon bonds have a yield
to maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is
LL’s after-tax cost of debt?
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