Ying Import has several bond issues outstanding, each making semiannual interest
ID: 2745530 • Letter: Y
Question
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. If the corporate tax rate is 31 percent, what is the aftertax cost of Ying's debt (leave your answer as an APR)? (Do not round your intermediate calculations.)
Bond
Coupon Rate
Price Quote (% of Face Value)
Maturity
Face Value
a) 3.2%
b) 3.07%
c) 4.64%
d) 3.04%
e) 3.36%
Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. If the corporate tax rate is 31 percent, what is the aftertax cost of Ying's debt (leave your answer as an APR)? (Do not round your intermediate calculations.)
Explanation / Answer
Therefore, the correct answer is option D.
YTM Tax @31% Afer Tax YTM 2.80% 0.87% 1.93% 4.15% 1.29% 2.86% 5.31% 1.65% 3.66% 5.25% 1.63% 3.62% 12.08% After tax cost of debt (12.08/4) 3.02048%Related Questions
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