Six years ago, the Silver Spar Company sold $50,000 par value, noncallable bonds that now have 14 yearsyears to maturity. The bonds have a 4.40% annual coupon rate that is paid quarterly. The bonds currently sell for $48,980 and the company's tax rate is 38%. What is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...
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Subject : Accounting

Six years ago, the Silver Spar Company sold $50,000 par value, noncallable bonds that now have 14 yearsyears to maturity. The bonds have a 4.40% annual coupon rate that is paid quarterly. The bonds currently sell for $48,980 and the company's tax rate is 38%. What is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations.

 

 

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