Question
A firm has an EBIT (Earnings Before Interest and Taxes) of $100,000. It has debt of $50,000 outstanding at 8% coupon rate. The firm borrows
A firm has an EBIT (Earnings Before Interest and Taxes) of $100,000. It has debt of $50,000 outstanding at 8% coupon rate. The firm borrows an additional $10,000 for ten years at an interest rate of 10%. The before-tax cost of debt for a weighted average cost of capital calculation is?
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Fundamentals of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
1st canadian edition
978-0133400694
