After-tax cost of debt of shama tours

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Shamas tours incorporated plans to issue a 20 year bond. Shama's tours expects the $1,000 par value bonds to sell at $995 each. Insistence cost are expected to be $5 per $1,000 bond and the coupon rate is 11 7/8 percent. If the effective tax rate is 40 percent what is the after-tax cost of debt of Shama's tours?

Reference no: EM132481067

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