Compute the rate of capital for the firm for the following1, Ask an Expert

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Compute the rate of capital for the firm for the following:

1) A bond that has a $1000 par value and a coupon interest rate of 12.6% with interest paid semiannually. A new issue would sell for $1,145 per bond and mature in 20 years. The firm's tax rate is 34%. The after-tax cost of debt for the firm is _____%.

2) A preferred stock paying a dividend of 6.9% on a $91 par value. If a new issue is offered, the shares would sell for $86.43 per share.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91622265

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