Reference no: EM132930677
Use the following financial data of Zonk Corporation to answer the next four questions. Zonk's Financial Information
Book value of debt capital $8,000,000
Book value of preferred equity capital $2,000,000
Book value of common equity capital $6,000,000
Number of common shares outstanding 1,000,000
Per share price of common stock $10
Per share price of preferred stock $50
Pretax borrowing rate 6%
Annual preferred dividend per share $4
Common equity beta 1.2
Effective income tax rate 20%
Problem 1: What is Zonk's after-tax cost of debt?
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