A Publicly traded company has issued $50M worth of stocks. The stock holders expect a rate of return of 12%. The company has a bank loan at an interest rate of 10% worth $12M. The company has sold bonds worth $20M at a rate of 6% compounded yearly. What is the after tax cost of capital if the company is in the 34% income tax bracket. 9.25% 6.2% 7.02% None of these

A Publicly traded company has issued $50M worth of stocks. The stock holders expect a rate of return of 12%. The company has a bank loan at an interest rate of 10% worth $12M. The company has sold bonds worth $20M at a rate of 6% compounded yearly. What is the after tax cost of capital if the company is in the 34% income tax bracket. 9.25% 6.2% 7.02% None of these

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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