For each of the following $1000-par-value bond, assuming annual interest payment and a 40% tax rate, calculate the after-tax cost to maturity using the approximation formula.
|
Bond
|
Life
|
Underwriting fee
|
Discount (-) or Premium (+)
|
Coupon interest rate
|
|
A
|
20-years
|
$25
|
-$20
|
9%
|
|
B
|
16
|
40
|
+10
|
10%
|
|
C
|
15
|
30
|
-15
|
12%
|
|
D
|
25
|
15
|
Par
|
9
|
|
E
|
22
|
20
|
-60
|
11
|