Compute the after-tax cost of debt for these bonds

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Reference no: EM13826226

Dunkin Industries sold a 15 year $1,000 face value bond with a 10.5 percent coupon rate. Interest is paid annually. After flotation costs, Dunkin received $920 per bond. Compute the after-tax cost of debt for these bonds if the firm's marginal tax rate is 40 percent.

A. 5.49%

B. 6.99%

C. 8.39%

D. 11.65%

Reference no: EM13826226

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