What is the firm after-tax cost of debt

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1. Stock A has a beta of 0.96 and an expected return of 21.41%. A risk-free asset currently earns 3.25%. If a portfolio of the two assets has an expected return of 14.76%, what is the beta of this portfolio?

2. ABC Inc. issued twelve-year, 6 percent semi-annual coupon bonds at par. Today, the bonds are priced at $1112. What is the firm’s after-tax cost of debt if the tax rate is 30%?

3. ABC has an unlevered cost of capital (Ra) of 18.29%, a cost of debt of 8.75%. What is the target debt-equity ratio if the targeted cost of equity (Rs) is 23.98%? Assume no taxes.

Reference no: EM131863036

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