What is the firms after tax cost of debt

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1. The outstanding bonds of panda express are priced at 1100 and mature in 3 years. These bonds have an 8 percent coupon and pay interest annually. The face value is 1000. The firms tax rate is 40 percent. What is the firms after tax cost of debt?

A 2.62 %

B 4.12 %

C 5.35 %

D 7.31 %

E 10.88 %

2. McKesson has a weighted average cost of capital of 12%. The company's cost of equity is 14%, and its pretax cost of debt is 10%. The tax rate is 40%. What is the company's target debt-equity ratio?

A 0.33

B 1.75

C 1.2

D 1.01

E 0.22

Reference no: EM131934931

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