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
Financial management theory and practice
ISBN: 978-0324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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