a company has issued 12% redeemable debt with 5 years to redemption. redemption is at par. the current market value of the debt is 107.59. the tax rate is 30%. wat is required return by the debt providers?
it's answers is 10.63.
but i don't know how to decide two rates to compute it? is it all judgement?
May 23rd 2008, 04:46 PM
Are you sure it's not 10.53?
May 24th 2008, 02:30 AM
i asked about the rates, how to decide two rates so they can be put into the formula to get the answer.
May 24th 2008, 12:55 PM
Let's see, you have a, b, A, and B. Have you definitions for those?