Solution for QID #355: A Corporation is considering issuing long-term debt. The deb | StudyHelpMe

A Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and a 13 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 6 percent of face value. In addition, the firm would have to pay flotation costs of 6 percent of face value. The firms tax rate is 34 percent. Given this information the after tax cost of debt would be?