What is the aftertax cost of debt

Reference no: EM13257640

KeySpan Corp. is planning to issue debt that will mature in 2035. In many respects, the issue is similar to currently outstanding debt of the corporation. Using Table 11-3, identify:

a) The yield to maturity on similarly outstanding debt for the firm, in terms of maturity.

b) Assume that because the new debt will be issued at par, the required yield to maturity will be 0.15 percent higher than the value determined in part a. Add this factor to the answer in a. (New issues at par sometimes require a slightly higher yield than old issues that are trading below par. There is less leverage and fewer tax advantages.)

c) If the firm is in a 30 percent tax bracket, what is the aftertax cost of debt?

Company

Ticker

CUSIP

Issue Rating

Maturity Date (MM/DD/YYYY)

Callable

S&P Industry

Coupon %

Yield to Maturity %

52-Week Low Price

52-Week High Price

Sales Price

Current Yield

KeySpan Corp

N/A

49337WAC4Nt

A-

11/15/2030

Yes

N/A

8.00

4.99

130.30

144.07

135.65

5.89

KeySpan Corp

N/A

49337WAH3Nt

A-

4/1/2033

Yes

N/A

5.88

4.98

107.79

121.25

111.296

5.27

KeySpan Corp

N/A

49337WAC4Nt

A-

4/1/2035

Yes

N/A

5.80

4.73

106.53

119.47

114.63

5.0

Reference no: EM13257640

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