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What is the company pretax cost of debt

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Reference no: EM132928120

Question - A company's stock has a beta of 1.34. The market risk premium is 7.70 percent and the risk-free rate is 3.30 percent annually.

The company also has a bond outstanding with a coupon rate of 8.2 percent and semiannual payments. The bond currently sells for $1,010 and matures in 16 years. The par value is $1000. The company's debt-equity ratio is .47 and tax rate is 30 percent.

a. What is the company's cost of equity?

b. What is the company's pretax cost of debt?

c. What is the after-tax cost of debt?

d. What is the weighted average cost of capital?

Reference no: EM132928120

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