Know pre-tax and after tax

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Know Pre-Tax and After Tax: SOLVE

Blade Inc. is planning to issue new bonds. The bonds will carry an 10% coupon rate (paid annually) and will have 20 years until maturity. Investors buying the bonds will pay $975. The investment bank helping float the issue will keep $50 per bond. Blade Is in the 40% tax bracket. Which of the following is closest to Blade's pre-tax cost of borrowing?

Hillbilly Co. is planning to issue new bonds. The bonds will carry an 11% coupon rate (paid annually) and will have 30 years until maturity. Investors buying the bonds will pay $940. The investment bank helping float the issue will keep $50 per bond. Hillbilly Is in the 30% tax bracket. Which of the following is closest to Hillbilly's after-tax cost of borrowing?

Reference no: EM132666918

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