Question
Fill in the blank: The interest rate of investors expect on a new bond issue can be determined by computing the (1)_____ for the companys
Fill in the blank:
The interest rate of investors expect on a new bond issue can be determined by computing the (1)_____ for the companys (2)_____. Alternatively, it is possible to determine the cost of new debt financing by computing the (3)_______ for bonds with (4)______ similar to that of the bonds issued.
The firms overall measure of the cost of capital is the (5)_____. The dollar cost of debt is the (6)_____. The dollar cost of equity is (7)_____. The overall firm average cost of capital is the cost of equity plus the cost of debt, divided by the (8)______.
Interest (is/is not) a tax-deductible expense, and dividends paid to stockholders (are/ are not). The payment of interest reduces the firms taxes by (9)_____. The after tax cost of debt in dollars equals (10)_____. The after tax cost of debt in percentage terms is (11)_____. WACC=(12)________
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