What is aftertax cost of debt

Assignment Help Financial Management

Reference no: EM131905654

Mullineaux Corporation has a target capital structure of 50 percent common stock, 5 percent preferred stock, and 45 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 6 percent. The relevant tax rate is 34 percent.

a. What is the company’s WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

WACC %

b. What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt %

Reference no: EM131905654

Questions Cloud

Affected by the domestic housing market over past year : Describe how U.S. interest rates have been affected by the domestic housing market over the past year.

How would you mitigate these risks : How would you (as a banker) mitigate these risks?

Monuments to preserve legacies of important events-people : Why do nations build museums and monuments to preserve the legacies of important events and people?

How much must be deposited now in order to withdraw : How much must be deposited now in order to withdraw $15,000 at the end of each year for 30 years, if interest is 11% compounded annually?

What is aftertax cost of debt : What is the aftertax cost of debt? What is the company’s WACC?

What is the current value of company : Calvert Corporation expects an EBIT of $19,750 every year forever. What is the current value of the company?

Deposits are made at the end of the period : What is the future value of $800 deposited annually at 9% interest for 25 years if the deposits are made at the end of the period?

Nestle cost of equity based on domestic portfolio : What is? Nestle's cost of equity based on domestic portfolio for Swiss? investor? What is? Nestle's cost of equity based on global portfolio for Swiss? investor

What price could mark sell the bond for in situation : What if mark’s government of Canada bond had a coupon rate of 9%, what price could mark sell the bond for in this situation ?

User Account

All Pages