The Outstanding Debt of Berstin Corp

question 86

Multiple Choice

The outstanding debt of Berstin Corp.has five years to maturity,a current yield of 6%,and a price of $95.Assume the debt has a face value of $100.What is the pretax cost of debt if the tax rate is 30%?

• A)4.2%
• B)4.8%
• C)6.9%
• D)7.3%
• E)7.7%

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Definitions:

Observer Bias

A form of research error that occurs when an observer's expectations or personal beliefs influence their interpretation of experimental outcomes.

Ecological-Systems Approach

A perspective on human development that considers all of the influences from the various contexts of development. (Later renamed bioecological theory.)

Bronfenbrenner

A psychologist known for his ecological systems theory, which considers the complex interrelations between individual development and environmental factors.

Microsystem

A part of the ecological systems theory that refers to the immediate environment in which an individual interacts, such as family, school, peers, and workplace.