A corporation sells $5,000 par value bonds at par in the open market, bearing an 8 percent coupon rate. Costs of marketing the issue, including dealer's commission, amounted to $200 per bond. If the bonds are due to mature in 15 years, what is their before-tax cost to the corporation? If the issuing company is in the 35 percent tax bracket, what is the bond's after-tax cost to the firm?

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The Answer of A corporation sells $5,000 par value bonds at par in the open market, bearing an 8 percent coupon rate. Costs of marketing the issue, including dealer's commission, amounted to $200 per bond. If the bonds are due to mature in 15 years, what is their before-tax cost to the corporation? If the issuing company is in the 35 percent tax bracket, what is the bond's after-tax cost to the firm?

A Corporation Sells $5,000 Par Value Bonds at Par in the Open