The Coupon Rate on an Issue of Debt Is 12

question 23

Multiple Choice

The coupon rate on an issue of debt is 12%.The yield to maturity on this issue is 14%.The corporate tax rate is 31%.What would be the approximate after tax cost of debt for a new issue of bonds?

• A) 4.34%
• B) 3.72%
• C) 9.66%
• D) 8.28%

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