debt/equity financing
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If a company has 10 million shares outstanding, now trading at $55 per share and the rate of return for the stock holders is about 12%. The company also issued long term bonds at a 7% interest rate. It pays 35% in taxes
What is after tax cost of WACC?
How much higher would the WACC be if they used no debt at all. The beta is not effected by the tax because the debt interest is tax deductible.
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This solution is comprised of a detailed explanation of how to determine the after tax cost of WACC.
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debt/equity financing
If a company has 10 million shares outstanding, now trading at $55 per share and the rate of return for the stock holders is about 12%. The company also issued long term bonds at a 7% interest rate. It pays 35% in taxes
What is the after ...
Purchase this Solution
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