A firm has issued 20 million in long-term bonds that now, Ask an Expert

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A firm has issued $20 million in long-term bonds that now have 10 years remaining until maturity. The bonds carry an 8% annual coupon but are selling in the market for $877.10. The firm also has $45 million in market value of common stock. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%? If the risk-free rate is 3%, the firm’s beta is 1.3, and market premium is 10%, what is the firm’s WACC?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91619778

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