Show the complete solution. Thank you so much. 1. Niño Company has 12% bonds outstanding that will mature in 10 years. The bonds are selling for P800 per P1,000 face value. Flotation costs are 2% of the par value. Income taxes are 40%. What is the after-tax cost of bonds, using approximate yield-to-maturity rates based on 50-50 rule?
Show the complete solution. Thank you so much. 1. Niño Company has 12% bonds outstanding that will mature in 10 years. The bonds are selling for P800 per P1,000 face value. Flotation costs are 2% of the par value. Income taxes are 40%. What is the after-tax cost of bonds, using approximate yield-to-maturity rates based on 50-50 rule?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 2P
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Show the complete solution. Thank you so much.
1. Niño Company has 12% bonds outstanding that will mature in 10 years. The bonds are selling for P800 per P1,000 face value. Flotation costs are 2% of the par value. Income taxes are 40%. What is the after-tax cost of bonds, using approximate yield-to-maturity rates based on 50-50 rule?
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