Question: What numbers do I need to plug in to the calculator ? What is the before-tax cost of debt? For FV, my professor used 1000,

What numbers do I need to plug in to the calculator ?

  1. What is the before-tax cost of debt? For FV, my professor used 1000, and i dont know where that number is from
  2. What is the after-tax cost of debt?

Debt

100,000 bonds with an 15.0% coupon rate, payable semiannually, 15 years to maturity, selling at $1,300 per bond.

Common Stock

1,500,000 shares of common stock outstanding. The stock sells for a price of $70 per share and has a beta of 1.6

Preferred Stock

200,000 preferred shares outstanding, currently trading at $120 per share; with an annual dividend payment of $8.50

Market

The market risk premium is 10% and the risk-free rate is 2%

Tax Rate

35%

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