Calculate the after-tax cost of the sony bond given

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Reference no: EM131989197

Problem

Before-tax cost of debt and after-tax cost of debt Personal Finance Problem 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 20%; Cost $ 920; 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: EM131989197

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