Cost of debt and the weighted average cost of capital

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Your first job after graduation is in the corporate finance department of a Fortune 500 firm. The firm wants to raise $10 billion in funds and asks you to compute the cost of preferred, the cost of debt, and the weighted average cost of capital. What is the before-tax cost of debt, if it issues 10-year bonds with a face value of $1,000, a market price of $950, and a flotation cost of $45 per bond. Each bond pays $30 in interest every six-months.

Reference no: EM131562056

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