Individual or component costs of capital compute the cost


(Individual or component costs of capital) Compute the cost of the following: A bond that has $ 1,000 par value (face value) and a contract or coupon interest rate of 11 percent. A new issue would have a flotation cost of 5 percent of the $ 1,125 market value. The bonds mature in 10 years. The firm's average tax rate is 30 percent and its marginal tax rate is 34 percent.

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Cost Accounting: Individual or component costs of capital compute the cost
Reference No:- TGS0657175

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