Question
Harley Davidson, Inc. (HOG) has $5.1 billion in total debt (which approximates its market value). Interest expense for the year was about $46.0 million. The
Harley Davidson, Inc. (HOG) has $5.1 billion in total debt (which approximates its market value). Interest expense for the year was about $46.0 million. The company's market capitalization is approximately $11.0 billion, its market beta is 2.16, and its assumed tax rate is 37%. Assume that the risk-free rate equals 2.5% and the market premium equals 5%.Rounding Instructions:Do not round until your final answers. Round answers to one decimal place.
(a) Estimate Harley Davidson's cost of debt capital.
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Accounting Volume 2
Authors: James Reeve, Jonathan Duchac, Sheila Elworthy, Carl S. Warren
2nd Canadian edition
176501452, 978-0176501457, 978-0176509743
