After-tax cost of debt to be used in the WACC calculation

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Reference no: EM131087866

The WeLoveBondValuation Company needs to estimate the cost of debt in their WACC calculation. The 10-year bond issue would have $1,000 par value, 5% coupon rate, and pay interest semiannually. The bonds would sell for $884.22 per bond. SHOW ALL WORK on the TI BAII Plus Calculator. a) (5 pts) What is the cost of debt? b) (2 pts) If the marginal tax rate of the company is 30%, what is the after-tax cost of debt to be used in the WACC calculation?

Reference no: EM131087866

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