Airborne Airlines Inc. has a $1,000 par value bond outstanding with 10 years to maturity.
Airborne Airways Inc. has a $1,000 par worth bond excellent with 10 years to maturity. The bond carries an annual curiosity cost of $112 and is at present promoting for $860. Airborne is in a 30 p.c tax bracket. The agency needs to know what the aftertax price of a brand new bond situation is more likely to be. The yield to maturity on the brand new situation would be the similar because the yield to maturity on the outdated situation as a result of the chance and maturity date will likely be comparable.a.Compute the yield to maturity on the outdated situation and use this because the yield for the brand new situation. (Don't spherical intermediate calculations. Enter your reply as a p.c rounded to 2 decimal locations.) Yield on new situation% b.Make the suitable tax adjustment to find out the aftertax price of debt. (Don't spherical intermediate calculations. Enter your reply as a p.c rounded to 2 decimal locations.)
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