The Coupon Rate on a Debt Issue Is 12

question 89

Multiple Choice

The coupon rate on a debt issue is 12%.If the yield to maturity on the debt is 9.33%,what is the after tax cost of debt (for a cost of capital calculation) if the firm's tax rate is 34%?

• A) 3.17%
• B) 4.08%
• C) 6.16%
• D) 7.92%

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Definitions:

Current Liabilities

Financial obligations or debts a company must pay within a year or within its normal operating cycle.

Long-term Liabilities

Financial obligations of a business that are due for repayment more than one year in the future, such as bonds or long-term loans.

Current Liabilities

Financial obligations that a company is expected to pay within one year.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.