If the Debt Is Trading at Face Value,what Coupon Rate

question 28

Multiple Choice

If the debt is trading at face value,what coupon rate is being paid on debt for a firm with an after-tax cost of debt of 7.5% and a tax rate of 40%?

• A) 10.5%
• B) 12.0%
• C) 12.5%
• D) 18.75%

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