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Determine the percentage cost of a million debt issue

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Problem 1: Determine the (after-tax) percentage cost of a P50 million debt issue that the Mathews Corporation is planning to place privately with a large insurance company. Assume that the company has a 40% marginal tax rate. This long-term debt issue will yield 12% to the insurance company.

a. 10.6%
b. 12.0%
c. 7.2%
d. 4.8%

Reference no: EM132807792

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