Determine the appropriate after-tax cost of new debt

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Reference no: EM131919812

1. Your car loan requires payments of $200 per month for the first year and payments of $400 per month during the second year. The annual interest rate is 12% and payments begin in one month. What is the present value of this 2-year loan?

2. Triplin corporations marginal tax rate is 35%. it can issue 10 year bonds with an annual coupn rate of 7% and a par value of $1,000. after $12 per bond flotation costs, new bonds will net the company $966 in proceeds. determine the appropriate after-tax cost of new debt for triplin to use in a capital budgeting analysis.

Reference no: EM131919812

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