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ABC Co. has 26 million shares outstanding trading at $18 per share. ABC also has $157 million in outstanding debt.

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ABC Co. has 26 million shares outstanding trading at $18 per share. ABC also has $157 million in outstanding debt. ABC has equity beta of 2. The expected market return is 7.3% and the risk-free rate is 1.0%. 

Given that ABC has return on assets of 11.6%, find its cost of debt d%. How much is d?


Expert Answer:

Answer rating: 100% (QA)

To find the cost of debt d for ABC Co you can use the following formula d R R f 1 T W View the full answer


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Financial reporting, financial statement analysis and valuation a strategic perspective

Financial reporting, financial statement analysis and valuation a strategic perspective

ISBN: 978-0324789416

7th Edition

Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw

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Posted Date: September 01, 2023 07:31:55
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