The long-term debt of Laurentide Union Bank is currently selling for 103 percent of its face value.The issue matures in 20 years and pays an annual coupon of 8 percent of face.The corporate tax rate is 40 percent.What is the after-tax cost of debt for Laurentide Union?
A) 3.08%
B) 4.62%
C) 4.80%
D) 7.70%
Correct Answer:
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