What is the company net after-tax interest cost

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Reference no: EM132655008

Bond interest payments before and after taxes Charter Corp. has issued 2,500 rate of 7%. debentures with a total principal value of $2,500,000. The bonds have a coupon

Question 1. What dollar amount of interest per bond can an investor expect to receive each year from Charter?

Question 2. What is Charter's total interest expense per year associated with this bond issue?

Question 3. Assuming that Charter is in a 35% corporate tax bracket, what is the company's net after-tax interest cost associated with this bond issue?

Assume that the Financial Management Corporation's $1,000-par-value bond had a 5.700% coupon, matures on May 15, 2027, has a current price quote of 97.708, and has a yield to maturity (YTM) of 6.034%.

Given this information, answer the following questions:

a. What was the dollar price of the bond?

b. What is the bond's current yield?

c. Is the bond selling at par, at a discount, or at a premium? Why?

d. Compare the bond's current yield calculated in part b to its YTM and explain why they differ.

Reference no: EM132655008

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