What is its after-tax cost of debt

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Dunkin’ Donuts’ bonds currently sell for $1171.19 (for a $1K face-value bond). The bonds’ coupon rate is 10% and the bonds mature in 15 years. Coupons are annual. What is the yield to maturity for this bond? Multiple-choice answers include 6%, 8%, 10%, and 12%. Assuming a well-functioning competitive market, infer the bondholders’ current required rate of return. Thus, what is the before-tax cost of debt for Dunkin’ Donuts? If the company is in the 30% tax bracket, what is its after-tax cost of debt?

Reference no: EM131070451

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