Problem 10 Intro Idaho Engineering Inc Has A Target Capital Structure Of 22 Debt 10 Preferred Stock And 68 Common S 1 (114.04 KiB) Viewed 9 times
Problem 10 Intro Idaho Engineering Inc. has a target capital structure of 22% debt, 10% preferred stock and 68% common stock. The interest rate on new debt is 5.8% (before taxes), the yield on preferred stock is 8% and the cost of retained earnings is 13%. The firm will not be issuing any new stock, and the tax rate is 33%. Part 1 What is the company's weighted average cost of capital? 3+ decimals Submit Attempt 1/10 for 10 pts.
Problem 11 Intro Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate of 3.4% and a yield to maturity of 5.4%. Simple Corp.'s average tax rate is 18% and its marginal tax rate is 31%. Part 1 What is the (pre-tax) cost of debt? 3+ decimals Submit Part 2 What is the after-tax cost of debt? 4+ decimals Submit Attempt 1/10 for 10 pts. Attempt 1/10 for 10 pts.
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