Component cost of debt should be used in wacc calculation

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To help finance a major expansion, Miami Development, Inc. sold a no callable bond several years ago that now has 15 years to maturity. This bond has a 9.75% annual coupon, paid semi-annually, it sells at a price of $1,175, and it has a par value of $1,000. MDI's marginal tax rate is 34.00% and new bonds have 4% flotation costs. What component cost of debt should be used in the WACC calculation?

Reference no: EM13724895

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Component cost of debt should be used in wacc calculation : To help finance a major expansion, Miami Development, Inc. sold a no callable bond several years ago that now has 15 years to maturity. This bond has a 9.75% annual coupon, paid semi-annually, it sells at a price of $1,175, and it has a par value of ..

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