Galvatron metals has a bond outstanding with a coupon rate of 6.7 percent and semiannual payments. the bond currently sells for $1,863 and matures in 21 years. the par value is $2,000 and the company's tax rate is 40 percent. what is the company's aftertax cost of debt?

4.40%

Explanation:

In this question, we use the Rate formula which is shown in the spreadsheet.  

The NPER represents the time period.  

Given that,  

Present value = $1,863

Future value or Face value = $2,000  

PMT = 2,000 × 6.7% ÷ 2 = $67

NPER = 21 years × 2 = 42 years

The formula is shown below:  

= Rate(NPER,PMT,-PV,FV,type)  

The present value come in negative  

So, after solving this,  

1. The pretax cost of debt is 7.34%

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 7.34% × ( 1 - 0.40)

= 4.40%

a

b

b

a

c

b

d

d

none of these are correct, as they are all sources of american law

a

answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;