Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is 6%. The bonds sold for par value, but flotation costs amounted to 5% of the price. You have a 21% corporate tax rate. What is your firm's cost of debt? 5.09% O 6.00% 4.74% 6.36%

Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is 6%. The bonds sold for par value, but flotation costs amounted to 5% of the price. You have a 21% corporate tax rate. What is your firm's cost of debt? 5.09% O 6.00% 4.74% 6.36%

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2EB: Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the...

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Question

Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is
6%. The bonds sold for par value, but flotation costs amounted to 5% of the price. You have a 21% corporate tax
rate. What is your firm's cost of debt?
5.09%
O 6.00%
4.74%
6.36%

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