question archive The long-term debt of Loonie Bank is currently selling for 103 percent of its face value
The long-term debt of Loonie Bank is currently selling for 103 percent of its face value
Subject:FinancePrice:2.87 Bought7
The long-term debt of Loonie 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 Loonie Bank?
a. 3.08%
b. 4.62%
c. 4.80%
d. 7.70%
e. None of the above
