Calculate the after-tax cost of the sony bond

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Reference no: EM131965415

Question: David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following information on the? security:

Sony Bond
Par value $1000	Coupon interest rate 5.5%	Corporate tax rate 25%
Cost 30	Years to maturity 10

Answer the following questions:

a. Calculate the before-tax cost of the Sony bond using the bond's yield to maturity? (YTM).

b. Calculate the after-tax cost of the Sony bond given the corporate tax rate.

Reference no: EM131965415

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