Find the after-tax cost of debt if the tax rate

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1. Alliance & Co has outstanding bonds with 15 years left to maturity. They have a coupon payment of 8.5% paid semiannually. The usual par value of $1,000 applies. Currently they selloff $1,025. Find the after-tax cost of debt if the tax rate is 37%.

2. Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 3.9% rate of inflation in the future. The real risk-free rate is 2%, and the market risk premium is 7%. Mudd has a beta of 2.2, and its realized rate of return has averaged 11% over the past 5 years. Round your answer to two decimal places.

Reference no: EM132064170

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