The George Company Has Two Issues of Debt

question 39

Multiple Choice

The George Company has two issues of debt.Issue A has a maturity value of 8 million dollars,a coupon rate of 8%,paid annually,and is selling at par.Issue B was issued as a 15-year bond 5 years ago.Its coupon rate is 9%,paid annually.Investors demand a pre-tax return of 9.3% on this bond.The maturity value of Issue B is 6 million dollars.The George company has a marginal tax rate of 35%.What is the company is after tax cost of debt?

• A)4.73%
• B)5.56%
• C)7.36%
• D)8.47%

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Definitions:

Script

A written text that outlines the dialogue and actions to be performed in a play, movie, broadcast, or software.

Restaurant

A place where people pay to sit and eat meals that are cooked and served on the premises.

Sequence of Events

The order in which related events or processes occur, often highlighting causality or chronological progression.

Primed

Prepared or made ready for use or action, often in the context of priming individuals psychologically to respond in a certain way to stimuli or tasks.