70.2K
Verified Solution
Link Copied!
Use the information below about AZ product Inc. to answer the question 21-24
375,000 shares of common stock outstanding at a market price of $30 a share.
Next year's annual dividend is expected to be $1.50 a share and the dividend growth rate is 2 percent.
The company also has 50,000 bonds outstanding that mature in 10 years.
The bonds make semiannual payments, coupon rate is 7.6%, and currently selling at 98.6 percent of face value (face value is $1,000 per bond).
The companys tax rate is 40 percent.
What is the companys before tax cost of debt?
| | A. | 5.2% |
| | B. | 7.4% |
| | C. | 7.8% |
| | D. | 9.6% |
Answer & Explanation
Solved by verified expert
