ADK has 30,000 15-year 9 percent annual coupon bonds outstanding.If the bonds currently sell for 111 percent of par and the firm pays an average tax rate of 36 percent,what will be the before-tax and after-tax component cost of debt?
A) 7.74 percent; 4.95 percent
B) 7.91 percent; 5.06 percent
C) 8.05 percent; 5.15 percent
D) 9 percent; 5.76 percent
Correct Answer:
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