What is holmes after-tax cost of debt

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Question 1: The Holmes Company's currently outstanding bonds have a 7% coupon and a 13% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is Holmes' after-tax cost of debt? Round your answer to two decimal places.

Question 2: Midwest Water Works estimates that its WACC is 10.55%. The company:r is considering the following capital budgeting projects. Assume that each of these projects is just as risky as the ?rrn's existing assets and that the ?rm mallr acoept all the projects or only some of them. Which set of projects should be accepted?

Project Size  Rate of Return

A $1 million 12.0%

B 2 million 11.5

c 2 million 11.2

D 2 million 11.0

E 1 million 10.

F 1 million 10.3

Reference no: EM132489994

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