The Long-Term Debt of Laurentide Union Bank Is Currently Selling

question 60

Multiple Choice

The long-term debt of Laurentide Union Bank is currently selling for 103 percent of its face value.The issue matures in 20 years and pays an annual coupon of 8 percent of face.The corporate tax rate is 40 percent.What is the after-tax cost of debt for Laurentide Union?

• A) 3.08%
• B) 4.62%
• C) 4.80%
• D) 7.70%

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Definitions:

Sleep Disorder

A medical disorder of the sleep patterns of a person or animal, which can significantly impact health and quality of life.

Allostatic Load

The cumulative burden of chronic stress and life events on the body's systems, which can affect overall health.

Alarm Reaction

The initial stage of the stress response, also known as the "fight or flight" response, characterized by the body's immediate reaction to a perceived threat.

Homeostasis

The tendency of a biological system to maintain stable internal conditions despite changes in the external environment.