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After-tax cost of financing

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Gronseth Drywall? Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the firm that different maturities will carry different coupon rates and sell at different prices. The firm must choose among several alternatives. In each? case, the bonds will have a ?$1000 par value and flotation costs will be ?$40 per bond. The company is taxed at 25?%. Use the approximation formula to calculate the ?after-tax cost of financing with the following alternative.

Coupon Rate: 8%

Time to Maturity 17 Years

Premium or Discount: 290

The after-tax cost of financing using the approximation formula is

(round answer to two decimal places)

Reference no: EM132554898

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After-tax cost of financing : Gronseth Drywall? Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds.
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