The Outstanding Bonds of Tech Express Are Priced at $1,023

question 83

Multiple Choice

The outstanding bonds of Tech Express are priced at $1,023 and mature in 13 years. These bonds have a face value of $1,000, a coupon rate of 6.5 percent, and pay interest semiannually. The tax rate is 21 percent. What is the aftertax cost of debt?

• A) 4.28 percent
• B) 4.22 percent
• C) 4.35 percent
• D) 4.93 percent
• E) 4.41 percent 

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Definitions:

Total Loss

The complete depletion of value of an asset or the sum of expenses surpassing all revenues, resulting in no net gain.

Most Efficiently

The method or process that achieves the best possible outcome with the least waste of resources.

Output

The amount of goods or services produced by a company, industry, or economy within a given period.

Natural Monopolies

These are markets where a single supplier is most efficient in providing goods or services due to high fixed or startup costs associated with the market.