Question
Adams Inc has a capital structure that consists of 70% common stock and 30% long-term debt. In order to calculate Adams WACC, an analyst has
Adams Inc has a capital structure that consists of 70% common stock and 30% long-term debt. In order to calculate Adams WACC, an analyst has accumulated the following information:
The company currently has 33-year, 8% annual coupon bonds that have a face value of $1,000 and sell for $1,075.
The risk-free rate is 6.50%. The market risk premium is 4%.
The beta on Clarks common stock is 1.1.
The companys tax rate is 38%.
Question: What is the "pre-tax cost of debt", the "after-tax cost of debt", "cost of equity" and "WACC", respectively Group of answer choices
7.39%, 4.54%, 9.65% 9.00%
7.10%, 4.40%, 9.65%, 8.08%
7.32%, 4.54%, 10.65%, 8.82%
7.39%, 4.58%, 10.90%, 9.00%
7.10%, 4.54%, 10.65%, 9.00%
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