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Pre-tax annual cost of debt

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Gul Corp. considers the following capital structure optimal: 40% debt, 50% equity, and 10% preferred stock. Guls bond currently sells in the market for $1150. The bond carries an annual coupon payment of 12% of the face value which is paid in two semiannual payments. The bond will mature in 15 years and it's face value is $1000. What is guls pre-tax annual cost of debt?

Reference no: EM131082514

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