Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 9.70% for...

 

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Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 9.70% for a period of four years. Its marginal federal-plus-state tax rate is 25%. WGC's after-tax cost of debt is 7.28% (rounded to two decimal places). At the present time, Western Gas & Electric Company (WGC) has 20-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,382.73 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WGC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) O 6.64% 7.97% O 5.31% O 7.64% Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 9.70% for a period of four years. Its marginal federal-plus-state tax rate is 25%. WGC's after-tax cost of debt is 7.28% (rounded to two decimal places). At the present time, Western Gas & Electric Company (WGC) has 20-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,382.73 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WGC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) O 6.64% 7.97% O 5.31% O 7.64%

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In the image there is a question that asks for the calculation of the aftertax cost of debt for the Western Gas Electric Company WGC To do this we fir... View the full answer