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Step 1. Compute for the market interest rate, that is the intererst rate that will result to a net present value of the bond for $946.
Market interest rate = 14.49%
Step 2. Compute the after tax cost of the market interest rate.
After tax cost of debt = 14.49% x (1-34%)= 9.57%
20150915 239964 Interest rate.xlsx
Thank you! I still need some help. I posted another one
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