1 gimp inc is trying to determine its cost of debt the firm, Ask an Expert

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1. GIMP Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 2 years to maturity that is quoted at 109.9 percent of face value. The issue makes annual payments and has an embedded cost (coupon rate) of 9.1 percent annually. What is the firm's pretax cost of debt? (Enter answer in percents.)

2. A company has a beta of 1.5. If the market risk premium is 10% and the current risk free rate is 5%, what is the cost of the company’s retained earnings? How does the answer change if the expected return of the market is 15%?

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Financial Management, Finance

Category:- Financial Management
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