What is the component cost of debt

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Reference no: EM132022332

1. Berkshire Hathaway's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25% annual coupon, paid semiannually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 35%, what is the component cost of debt for use in the WACC calculation?

A. 4.35%

B. 4.58%

C. 5.08%

D. 5.51%

2. The maximum growth rate a firm could achieve if it had no access to external capital is known best as: _________.

A. Spontaneous payout growth rate

B. Self-supporting growth rate

C. Full capacity growth rate

D. Hurley growth rate

Reference no: EM132022332

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