J & B, Inc. has $5 million of debt outstanding with a coupon rate of - 838

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  • Posted on: Mon 05 Mar, 2012
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Request Description

 

J & B, Inc. has $5 million of debt outstanding with a coupon rate of 12%. Currently, the yield to maturity on these bonds is 14%. If the firm’s tax rate is 40%, what is the cost of debt to J & B? 

A.5.6%

B.8.4%

C.14.0%

D.12.0%

 

Solution Description

J & B, Inc. has $5 million of debt outstanding with a coupon