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2. Refer to Exhibit 1 below. What is the best estimate for the firms after-tax cost of debt? Exhibit 1 1 A firm's abbreviated balance
2. Refer to Exhibit 1 below. What is the best estimate for the firms after-tax cost of debt?
Exhibit 1 1 A firm's abbreviated balance sheet along with additional information are provided below. The stock is currently selling for $6 per share, and its non-callable $1,000 par value, 20-years until maturity, 7% coupon bonds with semi-annual payments are selling for $900. The stock's beta is 2 and the risk-free rate is 3%. The expected return on the market is 10%. The firm's marginal tax rate is 25%
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