QUESTION

Tangshan Mining is considering issuing long-term debt. The debt would have a 30 year maturity and a 12 percent coupon ra

Category: Business
Subject: Accounting
Due Date: 12/23/2016
Question Asked: 2016-12-16 02:17:48

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Tangshan Mining is considering issuing long-term debt. The debt would have a 30 year maturity and a 12 percent coupon rate and make semiannual coupon payments. In order to sell the issue, the bonds must be underpriced at a discount of 2.5 percent of face value. In addition, the firm would have to pay flotation costs of 2.5 percent of face value. The firm's tax rate is 33 percent. Given this information, the after tax cost of debt for Tangshan Mining would be

A) 6.38%.

B) 12.76%.

C) 4.98%.

D) 8.55%.


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Tangshan Mining is considering issuing long-term debt. The debt would have a 30 year maturity and a 12 percent coupon ra

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Posted on 2016-12-16 02:17:48

Posted by:

User: ZAZU2014
Rating: C+ (1)
earnings: $11.00
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...firm would have to pay flotation costs of 2.5 percent of face value. The firm's tax rate is 33 percent...

The full tutorial is about 82 words long.