Cost of debt the walgreen corporation is contemplating a, Financial Management

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Cost of debt the walgreen corporation is contemplating a

(Cost of debt) The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. the firm can sell new $1000 par value bonds with a 15 year maturity at a price of $951 that carry a coupon interest rate of 13.3 percent that is paid semi annually. If the company is in a 34 percent tax bracket, what is the after tax cost of capital to Walgreen for the bonds?

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Financial Management: Cost of debt the walgreen corporation is contemplating a

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