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Compute the after-tax cost of debt for the bonds

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Reference no: EM132861489

Question 1: Husky Enterprises recently sold an issue of 13-year maturity bonds. The bonds were sold at a deep discount price of $505 each. After flotation costs, Husky received $492.23 each. The bonds have a $1,000 maturity value and pay $65 interest at the end of each year. Compute the after-tax cost of debt for these bonds if Husky's marginal tax rate is 40 percent.

Reference no: EM132861489

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