Asked by sheldon
3. CDL Inc. currently has a $10 million bond issue outstanding, which carries a coupon rate of 8.3% paid semi-annually, has 4 years remaining until maturity, and is priced to provide for a yield to maturity of 8.16%. The firm’s underwriter has indicated that flotation costs on new debt will be 5% before-tax. What is the component cost of debt if CDL’s tax rate is 35%?
a) 5.37%
b) 5.48%
c) 5.58%
d) 8.43%
a) 5.37%
b) 5.48%
c) 5.58%
d) 8.43%
Answers
Answered by
Jonathan Matis
5.58%
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.