A firmi before-ax cost of debt, Ra la the intereat rate that the from must...
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A firmi before-ax cost of debt, Ra la the intereat rate that the from must pay on debt fecause interest is tac defuctble, the reievant cost of caplaal budgeting deosions. The rele at anich the him has borrowed in the gert is because an need to know the cost of captal. for these ratsont, the outitanding debt (which reflects current market condtions) is a better measure od the cott of debt than the The ow the company to calculate the coat of debe becaus, more onten than not, the capital is being raised to hind Quantitative Problem: 5 vears ago, Barton Industries issued 25 rear noncallable, semiannual bonds wath a $1,000 foce value and a bW coupon, sentiannual payment ( 345 pevment every 6 monetis). The
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