Question 14 The before-tax cost of debt for a firm which has a 40 percent tax rate is 12 percent. The after-tax cost of debt is: 4.8% 6.0% 7.2% 12% Question 9 Which factor below affects the coupon interest rates when corporations issue bonds? Inventory level of the issuing corporation Bond rating of the issuing corporation Confidence level of the issuing corporation Working capital of the issuing corporation 6 A firm has determined its cost of each source of capital and optimal capital structure, which is composed of the following sources and proportions: Source of Capital Proportions After-Tax Cost Long-term debt 40% Preferred stock 10 11 Common stock equity 50 15 The weighted average cost of capital is A 6% B 10.7% C. 119 D. 15% 6% 10.79 1195 15%