What is the after-tax cost of debt for the bonds

Reference no: EM131786695

Question: Bowen's Casinos recently sold an issue of 15-year maturity bonds. The bonds were sold at $955 each. After issuance costs, Bowen received $948 each. The bonds have a $1000 maturity value and a 7 percent coupon rate. The coupon is paid annually. What is the after-tax cost of debt for these bonds if Bowen's effective tax rate is 40 percent?

A. 4.25%

B. 4.55%

C. 5.25%

D. 5.55%

Reference no: EM131786695

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