Page 407

ADK has 30,000 15-year 9 percent annual coupon bonds outstanding. If the bonds currently sell for 111 percent of par and the firm pays an average tax rate of 36 percent, what will be the before-tax and after-tax component cost of debt? Multiple Choice 9 percent; 5.76 percent 7.74 percent; 4.95 percent 7.91 percent; 5.06 percent 8.05 percent; 5.15 percent

When we adjust the WACC to reflect flotation costs, this approach: Multiple Choice raises only the cost of external equity. reduces each capital source’s effective cost. raises each capital source’s effective cost. reduces the cost of debt.

Profile for McdonaldRy61

FIN 370T Education Specialist / snaptutorial.com  

FIN 370T ASSIGNMENT Week 1 Apply: Week 1 Exercise Review the Week 1 “Knowledge Check” in Connect® in preparation for this Assignment .

FIN 370T Education Specialist / snaptutorial.com  

FIN 370T ASSIGNMENT Week 1 Apply: Week 1 Exercise Review the Week 1 “Knowledge Check” in Connect® in preparation for this Assignment .

Advertisement