Rollins Corporation is constructing its MCC schedule. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm's marginal tax rate is 40 percent. Rollins' component cost of debt? (Round off the answer to one decimal place.)
Rollins Corporation is constructing its MCC schedule. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm's marginal tax rate is 40 percent. Rollins' component cost of debt? (Round off the answer to one decimal place.)
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
Problem 1PS
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Cost of debt
Transcribed Image Text:Rollins Corporation is constructing its
MCC schedule. Its target capital
structure is 20 percent debt, 20 percent
preferred stock, and 60 percent
common equity. Its bonds have a 12
percent coupon, paid semiannually, a
current maturity of 20 years, and sell
for $1,000. The firm's marginal tax rate is
40 percent.
Rollins' component cost of debt?
(Round off the answer to one decimal
place.)
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