ack to Assignment Attempte Do No Harm/3 2. An overview of a firm's cost of debt To calculate the after-tax cost of debt, multiply the before-tax cost of debt by Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 11.10% for a period of six years. Its marginal federal-plus-state tax rate is 25%. WGC's after-tax cost of debt is (rounded to two decimal places). At the present time, Western Gas & Electric Company (WGC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,438.04 per bond, carry a coupon rate of 14%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. I WGC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 0 2.48% 0 3.57% 03.10% 0 2.79% Grade It Now Save & Continue Continue without saving Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm's control? Check all that apply. Interest rates in the economy The performance of index funds, such as the S&P 500 The firm's capital structure The impact of a firm's cost of capital on managerial decisions Consider the following case: National Petroleum Refiners Corporation (NPR) has two divisions, Land H. Division L is the company's low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company's high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division Lis considering a project with an expected return of 9.5%. Should National Petroleum Refiners Corporation (NPR) accept or reject the project? O Reject the project Accept the project On what grounds do you base our accept-reject decision? O Division L's project should be accepted, because its return is less than the risk-based cost of capital for the division. O Division L's project should be accepted, since its return is greater than the risk-based cost of capital for the division