What is after-tax cost of debt if the firm is in tax bracket

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1)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.

2) What is the after-tax cost of debt if the firm is in the 30% tax bracket?

3) What is the cost of preferred stock that will pay a dividend of $2.50, if the flotation cost is $2.00 per share, and if the public pays $48 per share?

4) What is the WACC if the firm raises $4 billion by issuing debt and $6 billion by issuing preferred?

Reference no: EM131561418

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