A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11 percent. A new issue would have a floatation cost of 5 percent of the $1,125 market value. The bonds mature in 10 years. The firm's average tax rate in 30 percent and its marginal tax rate is 34 percent.© BrainMass Inc. brainmass.com June 3, 2020, 11:23 pm ad1c9bdddf
Component Cost of Capital is embedded.