ABC Co. issues $1,000 par value, 5% semiannual coupon bonds, with 15 years to maturity. The company sells the bonds for $750. Find the after-tax cost of debt assuming a tax rate of 35% ?
XYZ bonds sell for $900. They have a $1,000 par value, 8% coupon rate with semiannual coupons, and 21 years to maturity. What is the pre-tax cost of debt?
The CEO of XYZ Co. has demanded a new calculation of the WACC for the company. The capital structure consists of 65% equity and 35% debt. The cost of equity is 13% and the pre-tax cost of debt is 4.5%. With a marginal tax rate of 39%, what is the WACC?