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Hamilton Company's 10.2 percent coupon rate, quarterly payment, $1,000 par value bond, which matures in 15 years, currently sells at a price of $1323.40. The
Hamilton Company's 10.2 percent coupon rate, quarterly payment, $1,000 par value bond, which matures in 15 years, currently sells at a price of $1323.40. The company's tax rate is 22 percent. Based on the nominal interest rate, not the EAR, what is the firm's after-tax cost of debt for purposes of calculating the WACC? 5.17% 5.47% 5.57% 5.27% 5.37% Question 4 1 pts Allison Engines Corporation has established a target capital structure of 40 percent debt and 60 percent common equity. The current market price of the firm's stock is PO = $40.3; its next dividend will be D1 = $2.4, and its expected dividend growth rate is 6.2 percent. What will Allison's marginal cost of retained earnings, rs, be? 11.96% 12.06% 11.76% 11.86% 12.16%
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