Nico Trading Corporation Is Considering Issuing Long-Term Debt

question 72

Multiple Choice

Nico Trading Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and a 10 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 5 percent of face value. In addition, the firm would have to pay flotation costs of 5 percent of face value. The firm's tax rate is 35 percent. Given this information, the after-tax cost of debt for Nico Trading would be ________.

• A) 7.26%
• B) 11.17%
• C) 10.00%
• D) 9.00%

---

Definitions:

Social Networks

Platforms on the internet where individuals can connect, interact, and share content with others, including sites like Facebook, Twitter, LinkedIn.

Self-Selected Stakeholder

An individual or group that chooses to be involved or have an interest in an organization or project based on personal or professional reasons.

Information

Data that is processed, organized, structured, or presented in a given context to make it meaningful and useful.

Resources

The assets, materials, and other items necessary for the production of goods and services or the execution of projects.