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What is the after-tax cost of debt? Select one: a. 5.0% b. 7.2% c. 6.0% d. 10.0% Info 3: Use for the next FOUR problems
What is the after-tax cost of debt?
Select one:
a. 5.0%
b. 7.2%
c. 6.0%
d. 10.0%
Info 3:
Use for the next FOUR problems
Steelers Wheels, Inc. anticipates addition to retained earnings of $19,200 this year. The company can raise debt at a 10% interest rate. The next dividend is expected to be $1.00 and the stock is selling for $10.26 a share with expected growth rate in dividends of 5%. Flotation cost on new common stock is 10%. Steelers Wheels has a capital structure of 50% debt, 50% equity and a tax rate of 40%.
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