Bender and Co. is issuing a $1,000 par value bond that pays 9% - 1269

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Price: $1.25
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  • Posted on: Sun 11 Mar, 2012
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Request Description

Bender and Co. is issuing a $1,000 par value bond that pays 9% interest annually. Investors are expected to pay $918 for the 10-year bond. Bender will have to pay $33 per bond in flotation costs. What is the cost of debt if the firm is in the 34% tax bracket? 

A.7.23%

B.9.01%

C.9.23%

D.11.95%

 
Solution Description

Bender and Co. is issuing a $1,000 par value bond that pays 9% interest ann