Vipsu Corporation plans to issue 10-year bonds with a par value of $1,000 that will pay $55 every six months. The net amount of capital to the firm from the sale of each bond is $840.68. If Vipsu is in the 25% tax bracket, what is the after-tax cost of debt?

Question

Quizplus · Accepted Answer

The Answer of Vipsu Corporation plans to issue 10-year bonds with a par value of $1,000 that will pay $55 every six months. The net amount of capital to the firm from the sale of each bond is $840.68. If Vipsu is in the 25% tax bracket, what is the after-tax cost of debt?

Vipsu Corporation Plans to Issue 10-Year Bonds with a Par