A firm has 60,000 shares whose current price is $62.57. These shareholders expect a return of 14%. The firm has a 3-year loan of $1,900,000 at 8.3%. it has issued 22,000 bonds with a face of $1,000,20 years left to maturity, semi-annual compounding , a coupon interest rate of 8% and a current price of $925. Using the above figures for its debt and equity, what is the firm's Cost of Capital after taxes with a tax rate of 34% ?

A firm has 60,000 shares whose current price is $62.57. These shareholders expect a return of 14%. The firm has a 3-year loan of $1,900,000 at 8.3%. it has issued 22,000 bonds with a face of $1,000,20 years left to maturity, semi-annual compounding , a coupon interest rate of 8% and a current price of $925. Using the above figures for its debt and equity, what is the firm's Cost of Capital after taxes with a tax rate of 34% ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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