BA350 Financial Management: 10-2 LL Incorporated’s currently outstanding 11% coupon bonds

BA350 Financial Management

10-2 After-Tax Cost of Debt
LL Incorporated’s currently outstanding 11% coupon bonds have a yield to maturity of 8%. LL believes it could issue at par new bonds that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL’s after-tax cost of debt?
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