The Outstanding Bonds of the Purple Fiddle Are Priced at $898

question 58

Multiple Choice

The outstanding bonds of The Purple Fiddle are priced at $898 and mature in nine years.These bonds have a 6 percent coupon and pay interest annually.The firm's tax rate is 35 percent.What is the firm's after-tax cost of debt?

• A) 4.94 percent
• B) 5.24 percent
• C) 5.30 percent
• D) 7.18 percent
• E) 7.61 percent

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Definitions:

Inflexible

A lack of adaptability or willingness to change opinions, behaviors, or actions.

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