# Question: A Firm’s Capital Structure Consists Of 30% Long-term Debt. At Present, The Company Can Raise Debt By Selling 22-year Bonds With A 11.85% Annual Coupon Interest Rate. The Firm Is In A 39.77% Income Tax Bracket. Its Bonds Generally Require An Average Discount Of $42 Per Bond And Flotation Costs Of $31 Per Bond When Being Sold. Required: Calculate The …

Question: A Firm’s Capital Structure Consists Of 30% Long-term Debt. At Present, The Company Can Raise Debt By Selling 22-year Bonds With A 11.85% Annual Coupon Interest Rate. The Firm Is In A 39.77% Income Tax Bracket. Its Bonds Generally Require An Average Discount Of $42 Per Bond And Flotation Costs Of $31 Per Bond When Being Sold. Required: Calculate The …

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A firm’s capital structure consists of 30% long-term debt. At present, the company can raise debt by selling 22-year bonds with a 11.85% annual coupon interest rate. The firm is in a 39.77% income tax bracket. Its bonds generally require an average discount of $42 per bond and flotation costs of $31 per bond when being sold. Required: Calculate the firm’s current after-tax cost of long-term debt. % (ROUND YOUR ANSWER TO 2 DECIMAL PLACES. FOR EXAMPLE: 17.23)