Laurel, Inc., has debt outstanding with a coupon rate of 6.1 % and a yield to...
Laurel, Inc., has debt outstanding with a coupon rate of 6.1 % and a yield to maturity of 6.8 %. Its tax rate is 38 %. What is Laurel's effective (after-tax) cost of debt? NOTE: Assume that the debt has annual coupons. Note: Assume that the firm will always be able to utilize its full interest tax shield.
Homework Answers
After-tax cost of debt=yield to maturity*(1-tax rate)
=6.8*(1-0.38)
which is equal to
=4.216%
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Laurel, Inc., has debt outstanding with a coupon rate of 6.1 %
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5. Laurel, Inc., has debt outstanding with a coupon rate of 6.1% and a yield to...
5. Laurel, Inc., has debt outstanding with a coupon rate of 6.1% and a yield to maturity of 6.9%. Its tax rate is 38%. What is Laurel's effective (after-tax) cost of debt? NOTE: Assume that the debt has annual coupons. Note: Assume that the firm will always be able to utilize its full interest tax shield. The effective after-tax cost of debt is %. (Round to four decimal places.)
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