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A firm is 65% equity and 35% debt. The firm's marginal tax rate is 40%. Their...

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Finance

A firm is 65% equity and 35% debt. The firm's marginal tax rateis 40%. Their bonds trade for $990, mature in nine years, have apar value of $1,000, a coupon rate of 8.00% and pay semi-annually.The firm's common stock trades for $27 and just paid a dividend of$5.00. Dividends are expected to grow at 3% forever. The firm'safter tax cost of debt is _____%.

PLEASE USE FINNACE CALUATLER FOR ANSWER IF NOT USE BASICCALUATOR WITH SOULUIONS EASY TO FOLLOW

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4.1 Ratings (482 Votes)
Information providedPar value future value 1000Current price present value 990Coupon rate 82 4Coupon payment    See Answer
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A firm is 65% equity and 35% debt. The firm's marginal tax rateis 40%. Their bonds trade for $990, mature in nine years, have apar value of $1,000, a coupon rate of 8.00% and pay semi-annually.The firm's common stock trades for $27 and just paid a dividend of$5.00. Dividends are expected to grow at 3% forever. The firm'safter tax cost of debt is _____%.PLEASE USE FINNACE CALUATLER FOR ANSWER IF NOT USE BASICCALUATOR WITH SOULUIONS EASY TO FOLLOW

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