Too Young, Inc., has a bond outstanding with a coupon rate of 6.8 percent and semiannual payments. The bond currently sells for $949 and matures in 25 years. The par value is $1000. What is the company's pretax cost of debt? O 760% O 1.596 Multiple Choice 739% O 7.60% O 7.85% 3.59% 7.39% 7.24%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Too Young, Inc., has a bond outstanding with a coupon rate of 6.8 percent and semiannual payments. The bond currently sells for $949 and
matures in 25 years. The par value is $1,000. What is the company's pretax cost of debt?
Multiple Choice
760%
785%
O 739%
3.59%
Multiple Choice
O
O
7.60%
7.85%
3.59%
7.39%
7.24%
Transcribed Image Text:Too Young, Inc., has a bond outstanding with a coupon rate of 6.8 percent and semiannual payments. The bond currently sells for $949 and matures in 25 years. The par value is $1,000. What is the company's pretax cost of debt? Multiple Choice 760% 785% O 739% 3.59% Multiple Choice O O 7.60% 7.85% 3.59% 7.39% 7.24%
b.
The cost of preferred stock:
Multiple Choice
O
O
O
O
is highly dependent on the dividend growth rate.
is equal to the dividend yield.
decreases when tax rates increase.
is equal to the yield to maturity.
is independent of the stock's price.
Transcribed Image Text:b. The cost of preferred stock: Multiple Choice O O O O is highly dependent on the dividend growth rate. is equal to the dividend yield. decreases when tax rates increase. is equal to the yield to maturity. is independent of the stock's price.
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