During the previous year, Leveraged Inc. paid $119 million of interest expense, and its average rate of interest for the year was 8.0%. The company's ROE is 11.1 %, and it pays no dividends. Estimate next year's interest expense assuming that interest rates will fall by 24% and the company keeps a constant equity multiplier. Question content area bottom Part 1 Next year's estimated interest expense is $___________   enter your response below. (Round to the nearest dollar.)

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Chapter 10 Evaluation Calculating Weighted Average Cost of Capital and Economic Value Added (EVA) Ignacio, Inc., had after-tax operating income last year of $1,199,500. Three sources of financing were used by the company: $2 million of mortgage bonds paying 4 percent interest, $4 million of unsecured bonds paying 6 percent interest, and $10 million in common stock, which was considered to be relatively risky (with a risk premium of 8 percent). The rate on long-term treasuries is 3 percent. Ignacio, Inc., pays a marginal tax rate of 30 percent. Required: 1. Calculate the after-tax cost of each method of financing. Enter your answers as decimal values rounded to three places. For example, 4.36% would be entered as ".044". Mortgage bonds 0.028 ✓ Unsecured bonds 0.042 ✔ Common stock 8.64 X % eBook 2. Calculate the weighted average cost of capital for Ignacio, Inc. Round intermediate calculations to four decimal places. Round your final answer to four decimal places before converting to a…

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