Charter Corp. has issued 1,554 debentures with a total principal value of ​$1,554,000. The bonds have a coupon interest rate of 9​%. a.  What dollar amount of interest per bond can an investor expect to receive each year from​ Charter? b.  What is​ Charter's total interest expense per year associated with this bond​ issue?   c.  Assuming that Charter is in a 39​% corporate tax​ bracket, what is the​ company's net​ after-tax interest cost associated with this bond​ issue?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...
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Charter Corp. has issued

1,554

debentures with a total principal value of

​$1,554,000.

The bonds have a coupon interest rate of

9​%.

a.  What dollar amount of interest per bond can an investor expect to receive each year from​ Charter?

b.  What is​ Charter's total interest expense per year associated with this bond​ issue?  

c.  Assuming that Charter is in a

39​%

corporate tax​ bracket, what is the​ company's net​ after-tax interest cost associated with this bond​ issue?   

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