Atlas IncHas a New Bond Issue That Will Net the Firm

question 49

Multiple Choice

Atlas Inc.has a new bond issue that will net the firm $1,603 500.The bonds have a $1,500,000 par value, pay interest annually at a 6% coupon rate, and mature in 10 years.The firm has a marginal tax rate of 34%.The after-tax cost of the debt issue is

• A)5.1%.
• B)3.37%.
• C)5.6%.
• D)6.58%.

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Definitions:

Supply

The total amount of a specific good or service that is available to consumers at a given price level in a given time period.

Demand

The measure of products or services that consumers are eager and equipped to purchase at varying prices during an established interval.

Increase in Demand

A rise in the quantity of a good or service that consumers are willing and able to purchase at each price point.

Quantity Supplied

The quantity of a product or service that sellers are prepared and capable of offering for sale at a specific price point.