18.

Anacortes Boutique has 550,000 shares of common stock outstanding at a market price of $15 a share. The company also has 15,000 bonds outstanding that are quoted at 97 percent of face value. Assume a face of $1,000 for these bonds. What weight should be given to the bond when the firm computes its weighted average cost of capital?

Group of answer choices

60.93%

36.18%

48.00%

63.82%

51.55%

12.

When a bonds yield to maturity is different from the bonds coupon rate, the bond price will be either higher or lower than its face value. In the case of a discount bond where the bond price is lower than its face value, what is the observation of its yield to maturity relative to its coupon rate?

Group of answer choices

We cannot compare the bonds yield to maturity to its coupon rate because we dont know the exact bond price.

The yield to maturity is higher than the coupon rate.

The yield to maturity is the same as the coupon rate.

The yield to maturity is lower than the coupon rate.

13.

The cost of debt for a firm on a pre-tax basis:

Group of answer choices

is equivalent to the coupon rate of the outstanding bonds of the firm

is highly dependent on the tax bracket of the firm.

is equivalent to the yield to maturity on the outstanding bonds of the firm

is highly dependent on the treasury bill yield

is equivalent to the current yield on the outstanding bonds of the firm