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What is the firm after-tax cost of debt

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1. Suppose ABE Co. issued a 20-year, 8 percent coupon rate bond three years ago. The bond is currently selling for $715.21. The bond has $1,000 face value and pays interests annually. If ABE's tax rate is 30 percent, what is the firm's after-tax cost of debt?

2. Stock in the U3 Corporation has a beta of 0.78. The market risk premium is 6 percent, and the risk-free rate is 3 percent. U3's next dividend will be $2.10 per share, and the constant growth of dividends is expected indefinitely. If the stock sells for $57.07 per share, what is the constant growth rate of dividends?

3. Tomeco Co. has a WACC of 12 percent. Its debt sells at a yield to maturity of 6 percent, and its tax rate is 30 percent. Its cost of equity is 14 percent. What is Tomeco's Equity/Total Assets ratio?

Reference no: EM132504235

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