Question
For the Bilbo corporation below. Debt: 10,000, 5% coupon bonds outstanding, priced at 100% of par value $100, with 15 years to maturity. These bonds
For the Bilbo corporation below. Debt: 10,000, 5% coupon bonds outstanding, priced at 100% of par value $100, with 15 years to maturity. These bonds pay interest annually. Preferred Stock: 50,000 shares of preferred stock with a dividend of $5.6 per share. It is currently selling at $80 per share. Common Stock: 200,000 shares common stock selling for $50 per share. The stock has a beta of 1.1 Market: The expected return on the market is 8%, and the risk-free rate of return is 3%. tax bracket = 20% What is the amount of outstanding debt for this company? Group of answer choices $4 million $2.5 million $5 million $1 million $10 million
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