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Galvatron Metals has a bond outstanding with a coupon rate of 6.5 percent and semiannual payments....

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Finance

Galvatron Metals has a bond outstanding with a coupon rate of6.5 percent and semiannual payments. The bond currently sells for$1,905 and matures in 15 years. The par value is $2,000 and thecompany's tax rate is 40 percent. What is the company's aftertaxcost of debt?

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Information provided Par value future value 2000 Coupon rate 652 325 Coupon payment 003252000 65 Current price present value    See Answer
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Galvatron Metals has a bond outstanding with a coupon rate of6.5 percent and semiannual payments. The bond currently sells for$1,905 and matures in 15 years. The par value is $2,000 and thecompany's tax rate is 40 percent. What is the company's aftertaxcost of debt?

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