Micro Spinoffs Incorporated issued 20-year debt a year ago at par value with a coupon rate of 8%, paid annually. Today, the debt isselling at $1,100. If the firm's tax bracket is 21%, what is its percentage cost of debt? Assume a face value of $1,000.Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.Cost of debt%

Calculate the annual coupon payment.Annual coupon payment = Coupon rate × Face valueAnnual coupon…

Answered: Micro Spinoffs Incorporated issued…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 16P

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Vijay
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