(Cost of debt) The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at a net price of $915. The coupon interest rate is 9 percent, and the bonds would mature in 19 years. If the company is in a 40 percent tax bracket, what is the after-tax cost of capital to Zephyr for bonds? The after-tax cost of capital to Zephyr for bonds is %. (Round to two decimal places.)

(Cost of debt) The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at a net price of $915. The coupon interest rate is 9 percent, and the bonds would mature in 19 years. If the company is in a 40 percent tax bracket, what is the after-tax cost of capital to Zephyr for bonds? The after-tax cost of capital to Zephyr for bonds is %. (Round to two decimal places.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 2STP

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