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6. What is the after-tax cost of debt for a company in the 42% tax bracket with a bond outstanding at 13% maturity? What if the tax bracket is 46%? What if the tax bracket is 38%? 7 JAIL

6. What is the after-tax cost of debt for a company in the 42% tax bracket with a bond outstanding at 13% maturity? What if the tax bracket is 46%? What if the tax bracket is 38%? 7 JAIL

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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6. What is the after-tax cost of debt for a company in the 42% tax bracket with a bond outstanding at 13% maturity? What if the tax bracket is 46%? What if the tax bracket is 38%? 7. What is the cost of preferred stock if the annual dividend is $8.75, stock price is $12, and the flotation cost is $3? How is the cost of preferred stock impacted if the annual dividend increases to $9? What if the annual dividend decreases to $8.50?
Transcribed Image Text:6. What is the after-tax cost of debt for a company in the 42% tax bracket with a bond outstanding at 13% maturity? What if the tax bracket is 46%? What if the tax bracket is 38%? 7. What is the cost of preferred stock if the annual dividend is $8.75, stock price is $12, and the flotation cost is $3? How is the cost of preferred stock impacted if the annual dividend increases to $9? What if the annual dividend decreases to $8.50?
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