Given the following information, what is the: a: After-tax cost of equity funding? b. The after-tax cost
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Question:
Given the following information, what is the:
a: After-tax cost of equity funding?
b. The after-tax cost of long-term debt funding?
c. The book value weights?
Marginal Tax Bracket: 21%
Equity Information
-50 million shares
-Issued with $40 Par value
-Sold at $40 per share, no excess
-Market Price: $80 per share
-D0 = $5.15
-Growth Rate = 5.0%
-Flotation Cost = 9.0%
-Retained Earnings = $1 billion
Debt Information
-$1 billion in outstanding debt
-$1,000 face value per bond
-Current quote = 110
-Coupon rate = 9%, semiannual coupons
-15 years to maturity
-Flotation Cost = 2%
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: