Tom Fong Music Inc., has an outstanding bond callable at $1,340. The total value of the bond is $100 million. The company is considering issuing a new bond and using the proceeds to buy back the existing bond The transaction cost of such refunding is $23,430,000. Suppose the tax rate is 30%. The total after-tax cost of refunding is

Tom Fong Music Inc., has an outstanding bond callable at $1,340. The total value of the bond is $100 million. The company is considering issuing a new bond and using the proceeds to buy back the existing bond The transaction cost of such refunding is $23,430,000. Suppose the tax rate is 30%. The total after-tax cost of refunding is

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter3: The Financial Environment: Markets, Institutions And Investment Banking

Section: Chapter Questions

Problem 13PROB

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