al ExamChapters 711 14 16 imRning0 minutes Back to Assignmen

al Exam-Chapters 7-11, 14, 16 imRning0 minutes Back to Assignment Deadline Today at 09:00 PM The Hillbart CompanyAC??s currently outstanding bonds have a 8% coupon and a 10% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is HeuserÄc??s after-tax cost of debt? 17. A. 5.70% B. 6.50% C. 6.70% D. 5.2096 Submit Answer Continue without saving Copyright Notices Terms of Use Privacy NoticeSecurity NoticeAccessibility

Solution

Cost of debt is its yield to maturity i.e 10%

after tax cost of debt = 10% * (1-35%) = 6.5%