Business, 13.05.2021 18:20 tressasill

Use the following information to answer question 10 and 11: Smashmedia Inc. has two outstanding bond issues: Bond A has a par value of $1000, has a coupon rate of 8% which it pays annually; Bond A matures in 5 Years and is currently trading at $738.06. Bond B matures in 3 year, pays 5% annual coupon, has a par value of $1000, and is currently trading at $791.05. In addition to the two bonds, Smashmedia also has a 10-Year loan with Deutsche Bank at an interest rate of 7%. Assume that the weights for the three borrowing sources are: 25% for Bond A; 25% for Bond B; and 50% for the 10-Year loan. Finally, the tax rate for firm X is T=25%. 1) What is the pre-tax cost of debt for Smashmedia Inc.?
2) What is the after-tax cost of debt for Smashmedia Inc?

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Use the following information to answer question 10 and 11: Smashmedia Inc. has two outstanding bond...

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