J&B, Inc. has $5 million of debt outstanding with a coupon rate of 12%. - 4448

Solution Posted by
UoPExpert

UoPExpert

Rating : (2)F
Solution Detail
Price: $1.30
  • From: ,
  • Posted on: Wed 28 Mar, 2012
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
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 12%. If the firm’s tax rate is 40%, what is the cost of debt to J&B? 

a. 14% 

b. 12% 

c. 8.4% 

d. 5.6

Solution Description

J&B, Inc. has $5 million of debt outs