Blackwater Adventures has a bond issue outstanding that matures in sixteen years.The bonds pay interest semi-annually.Currently,the bonds are quoted at 103 percent of face value and carry a 9 percent coupon.The firm's tax rate is 34 percent.What is the firm's after-tax cost of debt?
A) 5.19 percent
B) 5.71 percent
C) 7.86 percent
D) 8.65 percent
E) 11.41 percent
Correct Answer:
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