The rodman companys currently outstanding bonds have a 125


The Rodman Company's currently outstanding bonds have a 12.5 percent coupon and a 7.7 percent yield to maturity. Rodman believes it could issue new bonds that would provide a similar yield to maturity. If a marginal tax rate is 45 percent, what is Rodman's after-tax cost of debt?

A. 4.24% B. 7.70% C. 12.50% D. 6.88% E. 5.63%

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Financial Management: The rodman companys currently outstanding bonds have a 125
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