Describe briefly advantage of raising funds by issuing bonds

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Reference no: EM13142435

DuPont reports in a recent balance sheet $ 598 million of 5.25 percent notes payable due in 2016. The company’s income tax rate is approximately 19 percent.

a. Compute the company’s after- tax cost of borrowing on this bond issue stated as a total dollar amount.

b. Compute the company’s after- tax cost of borrowing on this bond issue stated as a percentage of the amount borrowed.

c. Describe briefly the advantage of raising funds by issuing bonds as opposed to stocks.

Reference no: EM13142435

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