A bond issue sells for $780. The coupon rate is 9.25%, the bonds mature in 13 years, and interest is paid semi-annually. The tax rate is 35%. What is the aftertax cost of debt?

	1.	3.18%
	2.	4.55%
	3.	8.29%
	4.	9.34%
	5.	5.39%

What is the yield to maturity on an 19-year, zero coupon bond selling for 30% of par value?

	1.	4.68%
	2.	6.45%
	3.	7.62%
	4.	9.05%
	5.	6.54%

Problem Solving: Given the following information, what is the WACC?

Commom Stock: 1 million shares outstanding, $35 per share, $1 par value, beta = 1.3; 10,000 bonds outstanding, $1,000 face value each, 8% annual coupon, 22 years to maturity, market price = $1,101.23 per bond

Market risk Premium = 8.7 %, risk-free rate = 5%, marginal tax rate = 35%