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Calculate pre-tax cost of debt capital

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Reference no: EM131473882

You know that the after-tax cost of debt capital for Bubbles Champagne is 5.40 percent. Assume that the firm has only one issue of five-year bonds outstanding. The bonds make semiannual coupon payments and the marginal tax rate is 30 percent.

Calculate Pre-tax cost of debt capital?

What is the current price of the bonds if the coupon rate on those bonds is 7.71 percent?

Reference no: EM131473882

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