Oriole Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Oriole
Posted: Wed May 18, 2022 10:49 pm
Oriole Ltd. has issued bonds that never require the
principal amount to be repaid to investors.
Correspondingly, Oriole must make interest payments into
the infinite future. If the bondholders receive annual payments of
$88 and the current price of the bonds is $1,100.00.
Pre-tax cost of debt = 8%
What is the after-tax cost of this debt for Oriole if the firm
is in the 40 percent marginal tax rate? (Round intermediate
calculations to 4 decimal places, e.g. 1.2514 and final answer to 2
decimal places, e.g. 15.25%.)
principal amount to be repaid to investors.
Correspondingly, Oriole must make interest payments into
the infinite future. If the bondholders receive annual payments of
$88 and the current price of the bonds is $1,100.00.
Pre-tax cost of debt = 8%
What is the after-tax cost of this debt for Oriole if the firm
is in the 40 percent marginal tax rate? (Round intermediate
calculations to 4 decimal places, e.g. 1.2514 and final answer to 2
decimal places, e.g. 15.25%.)