What is the firm weighted average aftertax cost of debt

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Reference no: EM131586541

Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of8 percent, matures in 6 years, has a total face value of $5 million, and is quoted at 101.2 percent of face value. The second issue has a 7.5 percent coupon, matures in 13 years, has a total face value of $18 million, and is quoted at 99 percent of face value. Both bonds pay interest semiannually. What is the firm's weighted average aftertax cost of debt if the tax rate is 34 percent?

5.95 percent

5.05 percent

5.63 percent

5.12 percent

6.08 percent

Reference no: EM131586541

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