What is the company pre-tax cost of debt

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Reference no: EM132047302

1. A bond matures in 2020 and has an annual coupon of 3.65 percent, payable on January 1 and July 1. The current price of the $1,000 bond is $982. On January 31, you purchase $10,000 face amount (settlement date is February 3) and your broker charged a $20 commission. How much must you remit for the purchase?

2. The Bet-r-Bilt Company has a 5-year bond outstanding with a 4.10 percent coupon. Interest payments are paid semi-annually. The face amount of the bond is $1,000. This bond is currently selling for 98 percent of its face value. What is the company's pre-tax cost of debt?

2.5 percent 10.0 percent 4.6 percent 4.1 percent 8.2 percent

Reference no: EM132047302

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