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The Lewin Inc. has issued 60,000 bonds with an 8% coupon rate and a quoted price of 110; the bonds have 30 years to maturity; the bonds make annual payments; $1,000 par value, the corporate tax rate is 25%. What is the aftertax cost of the debt? (Note:7%

The Lewin Inc. has issued 60,000 bonds with an 8% coupon rate and a quoted price of 110; the bonds have 30 years to maturity; the bonds make annual payments; $1,000 par value, the corporate tax rate is 25%. What is the aftertax cost of the debt? (Note:7%

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 9P: Bond Yield and After-Tax Cost of Debt A companys 6% coupon rate, semiannual payment, 1,000 par value...
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16 The Lewin Inc. has issued 60,000 bonds with an 8% coupon rate and a quoted price of 110; the bonds have 30 years to maturity; the bonds make annual payments; $1,000 par value, the corporate tax rate is 25%. What is the aftertax cost of the debt? (Note: 7% <YTM<8%)
Transcribed Image Text:16 The Lewin Inc. has issued 60,000 bonds with an 8% coupon rate and a quoted price of 110; the bonds have 30 years to maturity; the bonds make annual payments; $1,000 par value, the corporate tax rate is 25%. What is the aftertax cost of the debt? (Note: 7% <YTM<8%)
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