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Estimate sprint nextel cost of debt capital

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Question - Sprint Nextel Corporation (S) has $17.7 billion in total debt (which approximates its market value.) Each year this debt costs the company about $1.5 billion in interest expense. The company's market capitalization approximates $17.2 billion, its market beta is estimated 2.12, and its marginal tax rate is 35%. Assume that the risk-free rate equals 5.2% and the market premium equals 5.6%. Rounding Instructions: Do not round until your final answers. Round answers to one decimal place.

Estimate Sprint Nextel's cost of debt capital.

Reference no: EM132109805

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