Problem 5 Cost of Capital Formulas of Interest: WACC- weighted average of all source of funds in relation to interest rate paid A Publicly traded company has issued $50M worth of stocks. The stock holders expect a company has a bank loan at an interest rate of 10% worth rate of return of 12%,The 2M The company has sold bonds worth S20M at a rate of 6% compounded yearly Problem 5-1 Determine the before tax cost of capital for the company. A. 10.63% D. None of these C. 10.24% B. 9.32% Luuhe mpeu Son Problem 5-2 What is the after-tax cost of capital if the company is in the 34% income tax bracket. D. None of these C. 7.02% B. 62% A. 925%