What is its after tax component cost of debt

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1. HighValleyAntiques would like to issue new equity shares if its cost of equity declines to 10.5 percent. The company pays a constant annual dividend of $1.60 per share. What does the market price of the stock need to be for the firm to issue the new shares?

a. $15.24

b. $10.56

c. $17.33

d. $21.77

e. $14.48

2. Walken Industries bonds sell for $890 and have a par value of $1,000. The coupon rate is 6% and the bonds have a maturity of 20 years. If the company is in a 35% marginal tax bracked what is its after tax component cost of debt?

a. 9.98%

b. 6.31%

c. 7.04%

d. 4.58%

e. 8.91%

Reference no: EM131576892

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