Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Debt
of
tion
Common
Stock
Preferred
Stock
59,000 bonds with a 5.0% coupon rate,
payable annually, 15 years to maturity,
selling at $1,050 per bond.
554,000 shares of common stock
outstanding. The stock sells for a price
of $76 per share and has a beta of 1.20.
215,000 preferred shares outstanding,
currently trading at $70.00 per share;
with an annual dividend payment of
$5.20,
Market
The market risk premium is 13% and the
risk free rate is 4%
Tax Rate
26%
Time lef
What is the after tax cost of debt (Rd)? (Answer as a percentage and round to 2 decimals)
Oa. 0.76 %
Ob. -0.01 %
O c. 7.10%
O d. 5.20%
O e. 3.35 %
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Transcribed Image Text:Debt of tion Common Stock Preferred Stock 59,000 bonds with a 5.0% coupon rate, payable annually, 15 years to maturity, selling at $1,050 per bond. 554,000 shares of common stock outstanding. The stock sells for a price of $76 per share and has a beta of 1.20. 215,000 preferred shares outstanding, currently trading at $70.00 per share; with an annual dividend payment of $5.20, Market The market risk premium is 13% and the risk free rate is 4% Tax Rate 26% Time lef What is the after tax cost of debt (Rd)? (Answer as a percentage and round to 2 decimals) Oa. 0.76 % Ob. -0.01 % O c. 7.10% O d. 5.20% O e. 3.35 %
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