- 1 An Overview Of A Firm S Cost Of Debt For Which Capital Component Must You Make A Tax Adjustment When Calculating A Fi 1 (18.79 KiB) Viewed 122 times
- 1 An Overview Of A Firm S Cost Of Debt For Which Capital Component Must You Make A Tax Adjustment When Calculating A Fi 2 (19.99 KiB) Viewed 122 times
1. An overview of a firm's cost of debt For which capital component must you make a tax adjustment when calculating a firm's weighted average cost of capital (WACC)? Debt Equity O Preferred stock Water and Power Company (WPC) can borrow funds at an interest rate of 7.30% for a period of four years. Its marginal federal-plus-state tax rate is 25%. WPC's after-tax cost of debt is (rounded to two decimal places). At the present time, Water and Power Comp 5.21%
has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,092 7.30% pnd, carry a coupon rate of 11%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. I ants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt 4.66% (rounded to two decimal places)? (Note: Rou TM rate to two decimal place.) 5.48% O 8.21% O 6.43% 7.14% оо 8.57%