Compute the after tax cost of debt for these bonds

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Reference no: EM131337161

Husky Enterprises recently sold an issue of 10-year maturity bonds. The bonds were sold at a deep discount price of $615 each. After flotation costs, Husky received $604.50 each.

The bonds have a $1,000 maturity value and pay $50 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: EM131337161

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