Valence Industries issues a bond to finance a new project. It offers a 10-year, 5 percent semi-annual coupon bond. Upon issue, the bond sells at $1,025. What is Valence’s before-tax cost of debt? If Valence’s marginal tax rate is 35 percent, what is Valence’s after-tax cost of debt?
Cheers- I think the format might have shifted a bit after copying. Sorry still fail to understand how did you calculate the FV since it was not given in the data
Unless stated otherwise, bonds have a par (face) value of 1,000 (dollars, euro, pounds, Francs, whatever). The only (common) exception is bonds denominated in yen, which have, I believe, a value of JPY10,000.