1. The capital structure of a company is composed of debt and equity as follows. Given the following information, what is the after-tax cost of debt in the capital structure? 
2. 
   
3. The tax rate is %30. Equity Debt # of outstanding shares 10,000 - 
4. 
   
5. Stock Price (each) $50 - 
6. 
   
7. Expected dividend per share $4 - 
8. 
   
9. Dividend growth rate 3% - # of outstanding bonds - 5,000 
10. 
    
11. Coupon rate - 5% 
12. 
    
13. Bond price (each) - $950 
14. 
    
15. Years to maturity - 7
16. 
    
17. Multiple Choice 
18. 
    
19. a. 5%. 
20. 
    
21. b. 5.9%. 
22. 
    
23. c. 4.1%. 
24. 
    
25. d. 3.5%.
26. 
    
27. e. 3%.