Question: Use the below information for this problem; Debt rating AAA AA A BBB BB B CCC Average Debt Beta 0.05 0.05 0.05 0.1 0.17 0.26

Use the below information for this problem; Debt rating AAA AA A BBB BB B CCC Average Debt Beta 0.05 0.05 0.05 0.1 0.17 0.26 0.31

Market value of equity=$4,500

Market value of debt=$3,500

Equity beta=1.2

Debt rating=CCC

Coupon rate of bonds=6%

Yield to maturity of bonds=5.20%

Tax Rate=21% Suppose the risk-free is 1.1% and expected market risks premium is 5%. The effective cost of debt for Strive Corp. is ..........%. Round you answer to nearest one decimal place. Please give a step-by-step explanation.

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