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What is the after-tax cost of debt for perpetual

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Reference no: EM132597246

Current cost of a bond:

Question 1: Perpetual Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Perpetual must make interest payments into the infinite future. If the bondholders receive annual payments of $75 and the current price of the bonds is $882.35, what is the after-tax cost of debt for Perpetual if the firm is in the 40 percent marginal tax rate?

Annual payments = $75

Current price of bonds = $882.35

Marginal tax rate = 40%

After-tax cost of debt = ?

Reference no: EM132597246

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