Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925, and the companys tax rate is 40%. Given that Jakob Company would like to maintain a 50/50 debt/equity split, and the WACC is 12%, what is the cost of equity? Assume no preferred stock.

25.00%

7.74%

9.68%

4.84%

19.35%

Question 3 1 pts Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925, and the company's tax rate is 40%. Given that Jakob Company would like to maintain a 50/50 debt/equity split, and the WACC is 12%, what is the cost of equity? Assume no preferred stock. 25.00% 7.74% 9.68% 4.84% 19.35% Previous Next