Explore BrainMass

Explore BrainMass

    Computing Individual or Component Costs of Capital

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    11-2 (Individual or component costs of capital) Compute the cost of the following:

    a. A bond selling to yield 7 percent after flotation costs, but before adjusting for the marginal corporate tax rate of 34 percent. In other words, 7 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows (principal and interest).

    © BrainMass Inc. brainmass.com June 3, 2020, 9:19 pm ad1c9bdddf
    https://brainmass.com/business/bond-valuation/computing-individual-component-costs-capital-176962

    Solution Preview

    A bond selling to yield 7 percent after flotation costs, but before adjusting for ...

    Solution Summary

    This solution provides step by step calculations for cost.

    $2.19

    ADVERTISEMENT