Contemporary Engineering Economics 6th Edition by Chan Park

تمرين 1

The Sweeney Paper Company is planning to sell $10 million worth of long-term bonds with an 11% interest rate. The company believes that it can sell the $1,000 par value bonds at a price that will provide a yield to maturity of 13% to its investors. The flotation costs will be 1.9%. If Sweeney's marginal tax rate is 35%, what is its annual after-tax cost of debt