The following information applies to the Coetzer Company: Coetzer has a target capital structure of 40%

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The following information applies to the Coetzer Company:

· Coetzer has a target capital structure of 40% debt and 60% common equity.

· Coetzer has 15-year, 12% annual coupon bonds that have a face value of $1,000 and sell for $1,150.

· The risk-free rate is 5%. The market risk premium (RPM) is also 5%.

· Coetzer's common stock has a beta of 1.4.

· Coetzer's tax rate is 40%.

What is the company's after-tax cost of debt?

Related Book For answer-question

Financial management theory and practice

ISBN: 978-0324422696

12th Edition

Authors: Eugene F. Brigham and Michael C. Ehrhardt

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Posted Date: Jan 17, 2021 09:23 AM

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The following information applies to the Coetzer Company: Coetzer has a target capital structure of 40%

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Financial management theory and practice

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