[Polobear]

Decline, Inc. is trying to determine its cost of debt. The firm has a debt issue outstanding with 14 years to maturity that is quoted at 91 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. Company's pretax cost of debt is ______ percent. If the tax rate is 37 percent, the aftertax cost of debt is______ percent.

[songstryssrmb]

N= 12*2= 24
pv= -(94/100)* 1000= -940
pmt=7*10=70 70/2 = 35 (semi annual)
fv=1000
I/y = 3.889%
ytm=3.889%*2 = 7.78% (pretax cost of debt)

after tax cost of debt = 0.0778*(1-0.35) = 0.0506/5.06%

[gabby75]

=interest rate x tax rate
= 6% x (1-0.37)
= 6% x 0.63
= 3.78

[shahla hasan]

Calculate the cost of perpituty debenture if coupen rate is 9.5% debenture of rs.100each issued at a discount of 4% and floatation cost 1%.tax rate 3.5%

[shahla hasan]

Calculate cost of perpituty debentursif coupen rate is 9.5% debenture of rs. 100 each issued at a discount of 4% and floatation cost 1% .tax rate 35%