What is the after-tax cost of debt capital

Reference no: EM13260116

A corporate bond has a face value of $1,000 and a coupon rate of 9.5%. The bond matures in 12 years and has a current market price of $1,100. If the corporation sells more bonds it will incur flotation costs of $48 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital?

5.91%
5.71%
6.18%
5.31%

Reference no: EM13260116

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