A firm is expecting to grow at a constant rate of 5.25%. To do so, it...

 

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A firm is expecting to grow at a constant rate of 5.25%. To do so, it will need to raise additional capital, including debt capital. Currently their $1,000 face value bonds that mature in ten years are selling for $1,035.00 and pay $85.00 in annual interest. Their combined state and federal tax rate is 25%. Calculate the firm's cost for new debt capital. Select one: O a. 5.98% O b. 7.98% O c. 8.50% O d. 6.38% A firm is expecting to grow at a constant rate of 5.25%. To do so, it will need to raise additional capital, including debt capital. Currently their $1,000 face value bonds that mature in ten years are selling for $1,035.00 and pay $85.00 in annual interest. Their combined state and federal tax rate is 25%. Calculate the firm's cost for new debt capital. Select one: O a. 5.98% O b. 7.98% O c. 8.50% O d. 6.38%

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