JNCT corp. has the following data to present. (1) You will use the firm's 30-year bonds...
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JNCT corp. has the following data to present. (1) You will use the firm's 30-year bonds (noncallable) that were issued 10 years ago. (2) The respective bonds have a coupon rate of 8.00% (par value = $1,000) (3) Currently the bond is priced at $1,050. (4) The company's tax rate is 40%. (5) The 1-year T-note rate is at 4.50%. The market risk premium is 5.50%. (6) The stock's beta is estimated 1.20. (7) Target capital structure: Wd = 35% debt Wcs = 65%. The firm does not expect to issue any new shares. What is its after-tax cost of debt? What its WACC? JNCT corp. has the following data to present. (1) You will use the firm's 30-year bonds (noncallable) that were issued 10 years ago. (2) The respective bonds have a coupon rate of 8.00% (par value = $1,000) (3) Currently the bond is priced at $1,050. (4) The company's tax rate is 40%. (5) The 1-year T-note rate is at 4.50%. The market risk premium is 5.50%. (6) The stock's beta is estimated 1.20. (7) Target capital structure: Wd = 35% debt Wcs = 65%. The firm does not expect to issue any new shares. What is its after-tax cost of debt? What its WACC?
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To calculate the aftertax cost of debt we can use the following formula Aftertax cost of debt Yield ... View the full answer
Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118983270
7th edition
Authors: Michael Granof, Saleha Khumawala, Thad Calabrese, Daniel Smith
Posted Date:
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