Required information A company that makes several different types of skateboards, Jennings Outdoors, incurred interest expenses of $1,000,000 per year from various types of debt financing. The company received $16,200,000 in year 0 through the sale of discounted bonds with a face value of $20,000,000. The company repaid the principal of the loans in year 15 in a lump sum payment of $20,000,000. The company's effective tax rate is 32%. hat was Jennings' cost of debt capital before taxes? e Jennings' cost of debt capital before taxes is %.
Required information A company that makes several different types of skateboards, Jennings Outdoors, incurred interest expenses of $1,000,000 per year from various types of debt financing. The company received $16,200,000 in year 0 through the sale of discounted bonds with a face value of $20,000,000. The company repaid the principal of the loans in year 15 in a lump sum payment of $20,000,000. The company's effective tax rate is 32%. hat was Jennings' cost of debt capital before taxes? e Jennings' cost of debt capital before taxes is %.
Chapter2: The Domestic And International Financial Marketplace
Section2.A: Taxes
Problem 2P
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