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DO NOT DO THIS BY USING EXCEL 3. The GOJO Steam Cleaning Corporation is preparing to purchase a new mobile steam cleaning fleet for $5,000,000.
DO NOT DO THIS BY USING EXCEL
3. The GOJO Steam Cleaning Corporation is preparing to purchase a new mobile steam cleaning fleet for $5,000,000. The proposed sources of capital are $2,000,000 from a bank loan, $500,000 from a bond issuance, $1,000,000 from a stock sale, and the remainder from retained earnings. The specifics for each source are listed below. GOJO is in a 21% tax bracket. | 15% before tax interest rate, payable in 5 equal annual payments Bond lssuance Stock Sale a. What is the after tax cost of the bond capital? b. What is the after tax cost of the loan capital? c. What is the after tax cost of the stock capital? d. What is the after tax cost of the retained earnings capital? e. What is the weighted average cost of capital 12% bond interest rate with quarterly payments and a 5 year maturityStep by Step Solution
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