Cost of debt for a firm: You are analyzing the after tax cost of debt for a firm. You know that the firm's 12 year maturity, 9.75 percent semi-annual coupon bonds are selling at a price of $1,200. If these bonds are the only debt outstanding for the firm, what is the 1. After-tax cost of debt for this firm if the marginal tax rate for the firm is 34%? 2. After-tax cost of debt if selling at par?
Maturity 12
Coupon rate 9.50%
Current bond price $1,200
Tax rate 34%
Par value $1,000
Coupon frequency 2
2. What is expected beta of a national chain of home goods stores?
Near 1
Between 0 and 1
Greater than 1
Near 0
Not enough information given