What is the component cost of debt for wacc purposes

Reference no: EM131965104

Question: The current price of Jana's 12% coupon semiannual payment, noncallable bonds with 15 years remaining in maturity is $1,153.72 with $1,000 face value. Jana does not use short term interest bearing debt on a permanent basis. New bonds would be privately placed with no flotation cost. Tax rate is 40%.

What is the market interest rate on Jana's debt and what is the component cost of this debt for WACC purposes? (WACC= Weighted Average Cost of Capital)

Reference no: EM131965104

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