What is the cost of capital for ksl

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Q1) KSL Capital Partners has debt with a market value of $350,000, preferred stock with market value of $50,000 and common stock with market value of $480,000. If the after-tax cost of debt is 8%, preferred cost is 10% and common stock cost is 12%, what is the cost of capital for KSL if they are in the 30% tax bracket?

a) 11.2%

b) 6.8%

c) 9.3%

d) 10.3%

Q2) The yield to maturity (same as required rate of return) on a bond is:

a) below the coupon rate when the bond sells at a discount.

b) based on the assumption that any payments received are reinvested at the prime rate.

c) above the coupon rate when the bond sells at a premium.

d) the discount rate that will set the present value of the future interest payments equal to the bond price (value).

Reference no: EM132943810

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