What is the effective annual after-tax cost of debt capital

Reference no: EM13234006

A facility requires $2500000 in debt capital. The plan is to sell twenty-year bonds that pay 4.2 percent per year, payable quarterly, at a 3 percent discount on the face value. The facility has an effective tax rate of 35 percent per year. What is the total face value of the bonds required to obtain $2500000 and what is the effective annual after-tax cost of debt capital?

Reference no: EM13234006

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