S.Claus & Co.is planning a zero coupon bond issue that has a par value of $1,000 and matures in 2 years.The bonds will be sold today at a price of $950.00.If the firm's marginal tax rate is 40.00%,what is the annual after-tax cost of debt to the company on this issue? Do not round your intermediate calculations.
A) 1.18%
B) 1.61%
C) 1.56%
D) 1.36%
E) 1.90%
Correct Answer:
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