Problem:
Use the information below to determine before-tax cost of debt financing of bond T.
- Selling Price of the Bond: $1181
- Number of Years to Maturity: 20
- Annual Coupon Rate (paid annually): 10.59%
- Par value: 1000
- Floatation Costs: $2.51
Required:
Question: What is the Before Tax Cost of Debt Financing Percentage?
Note: Show all workings.