Ignoring taxes, if a ﬁrm issues debt at par, then the cost of debt is equal to its coupon rate.

Name: Ignoring taxes, if a ﬁrm issues debt at par, then the cost of debt is equal to its coupon rate.
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When a firm issues debt at par, it means that the market value of the debt is equal to its face value. In this case, the cost of debt is equal to the coupon rate, which is the interest rate paid on the debt. However, taxes can affect the effective cost of debt.

Ignoring Taxes, If a ﬁRm Issues Debt at Par, Then