If a corporation has an average tax rate of 40 percent, the approximate, annual, after-tax cost of debt for a 15-year, 12 percent, $1,000 par value bond, selling at $950 is
A. 10 percent.
B. 10.6 percent.
C. 7.6 percent.
D. 6.0 percent.
Answer:C
If a corporation has an average tax rate of 40 percent, the approximate, annual, after-tax cost of debt for a 15-year, 12 percent, $1,000 par value bond, selling at $950 is
A. 10 percent. B. 10.6 percent. C. 7.6 percent. D. 6.0 percent.