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at the present time, andalusian limited (al) has 20-year noncallable bonds with a face value of $1,000 that are outstanding. these bonds have a current market price of $1,382.73 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. the company incurs a federal-plus-state tax rate of 25%. if al wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (note: round your ytm rate to two decimal place.)

Answer

Let's talk about the after-tax price of debt. It refers to the amount a company pays on its debt after taking into account any tax savings resulting from deductible activity expenses. To calculate this figure, subtract the company's tax rate from one, and then multiply the difference by its value of debt. Now, you may be wondering why we use an after-tax figure for the fee of debt. Well, the primary advantage is that it helps businesses understand how much they can save on taxes by paying interest on their debt. To determine the full cost of debt, companies need to know their effective tax rate. Fortunately, calculating this rate is a straightforward process. For further information on after-tax cost of debt, check out brainly.com/question/29332946 #SPJ4.