Firm is debt financed and what is the after-tax cost of debt

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Reference no: EM131509260

A firm has issued $20 million in long-term bonds that now have 10 years remaining until maturity. The bonds carry an 8% annual coupon and are selling in the market for $877.10. The firm also has $45 million in market value of common stock. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%?

Reference no: EM131509260

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