Boulder Furniture has bonds outstanding that mature in 13 years, have a 6 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,040. What is the company's aftertax cost of debt if its tax rate is 32 percent?
A. 2.97 percent
B. 3.24 percent
C. 3.78 percent
D. 5.21 percent
E. 5.53 percent
Ans: C. 3.78 percent
Business
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