Forest Pty's bonds will mature in four years with a total face value of $20,000,000. The bonds

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Forest Pty's bonds will mature in four years with a total face value of $20,000,000. The bonds pay semieannual coupons at a rate of 10% pa. The yield on the bonds is 18% pa. The company has 300,000 preference shares that pay $0.53 per share dividends and are selling for $5.00 per share.

Forest also has 5,000,000 ordinary shares currently selling for $2.50 per share. The 3 (beta) for the ordinary share.

The market risk premium is estimated to be 10% pa, the risk-free rate is 6% pa and the company tax rate is 30%.

Calculate the Forest Pty's Atteretax Cost of Capital?

Related Book For answer-question

Intermediate Accounting

ISBN: 978-0176509736

10th Canadian Edition, Volume 1

Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,

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Posted Date: Apr 04, 2023 11:57 PM

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Forest Pty's bonds will mature in four years with a total face value of $20,000,000. The bonds

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To calculate Forest Ptys aftertax cost of capital we need to determine the cost of debt cost of pref... View the full answer

Intermediate Accounting

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