Question
1. Assume Netflix has just issued a semi-annual bond with a par value of $1,000 and with a coupon rate of 3.25 %. Given that
- 1. Assume Netflix has just issued a semi-annual bond with a par value of $1,000 and with a coupon rate of 3.25 %. Given that the coupon rate is low, the Company's bond sold at
- 82 % of par. The band's maturity is 15 years, and the tax rate is 21 %. Estimate Netflix's after-tax cost of debt.
- 2. Assuming that the optimal capital structure of your company is 70% equity and 30 % debt, estimate Netflix's capital cost.
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