Tax cost of debt for the newly issued bonds

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Rueven Corp. is undergoing a major expansion. The expansion will be financed by issuing new 16 year, $1000 par, 9% semiannual coupon bonds. The market price of the bonds is $1,090 each. Rueven's flotation expenses on the new bonds will be $50 per bond. What is the pre tax cost of debt for the newly issued bonds?

Shanos Inc. would like to finance an experimental cost-saving procedure by issuing new common stock. The corporation's existing common stock currently sells for $33.99. Management believes that they can issue new common stock at this price, incurring flotation costs of 7.87% of the current market price. What is the stock's net market price (net proceeds)?Submit your answer as a dollar amount and round your answer to two decimal places. (Ex. $0.00)

Kharnila Corp. is wondering the purchase of a new factory and would like to finance the purchase with a combination of debt and equity. The factory will cost $88,866 total of which $16,853 will be financed by new common stock. the remainder will be financed by debt. What is the proportion of debt financing for use in the WACC calculation? Submit your answer as a percentage and round to two decimal places. (Ex. 0.00%)

Reference no: EM131758093

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