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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Cost of debt using the approximation formula For each of the following $1,000- par-value bonds, assuming annual interest payment and a 40% tax rate, calculate the after-tax cost to maturity using the approximation formula.
|
 |
 |
 |
Discount (-) or |
 |
|
Bond |
Life |
Underwriting fee |
premium (+) |
Coupon interest rate |
|
A |
20 years |
$25 |
-$20 |
9% |
|
B |
16 |
40 |
+ 10 |
10 |
|
C |
15 |
30 |
- 15 |
12 |
|
D |
25 |
15 |
Par |
9 |
|
E |
22 |
20 |
- 60 |
11 |
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