Question

Ahmad Couture has bonds outstanding with a face value of $1,000, 11 years to maturity, and a coupon rate of 6 percent paid semiannually. What is the company's pretax cost of debt if the bonds currently sell for $1,067.12

Answer 1

Ahmad Couture pretax cost of debt if the bonds currently sell for $1,067.12 is 2.6%.

What is the pretax cost of debt?

A bond is a debt instrument used by businesses to raise capital needed for business operations.

The company's pretax cost of debt can be determined using a financial calculator:

• Cash flow in year 0 = -1067.12
• Cash flow each year from period 1 to 22 = (6% / 2) x 10000 = $30
• Cash flow at the end of period 22 = 1000
• company's pretax cost of debt = 2.6%

To learn more about bonds, please check: https://brainly.com/question/13326746

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