Airborne airlines inc. has a $1,000 par value bond outstanding with 20 years to maturity. the bond carries an annual interest payment of $100 and is currently selling for $900. airborne is in a 25 per

Airborne airlines inc. has a $1,000 par value bond outstanding with 20 years to maturity. the bond carries an annual interest payment of $100 and is currently selling for $900. airborne is in a 25 percent tax bracket. the firm wishes to know what the aftertax cost of a new bond issue is likely to be. the yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.