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Business, 05.11.2019 00:31 augustmarie

Collins groupthe collins group, a leading producer of custom automobile accessories, has hired you to estimate the firm's weighted average cost of capital. the balance sheet and some other information are provided below. assetscurrent assets $ 38,000,000net plant, property, and equipment 101,000,000total assets $139,000,000liabilities and equityaccounts payable $ 10,000,000accruals 9,000,000current liabilities $ 19,000,000long-term debt (40,000 bonds, $1,000 par value) 40,000,000total liabilities $ 59,000,000common stock (10,000,000 shares) 30,000,000retained earnings 50,000,000total shareholders' equity 80,000,000total liabilities and shareholders' equity $139,000,000the stock is currently selling for $15.25 per share, and its noncallable $1,000 par value, 20-year, 7.25% bonds with semiannual payments are selling for $875.00. the beta is 1.25, the yield on a 6-month treasury bill is 3.50%, and the yield on a 20-year treasury bond is 5.50%. the required return on the stock market is 11.50%, but the market has had an average annual return of 14.50% during the past 5 years. the firm's tax rate is 40%.12. refer to the data for the collins group. what is the best estimate of the after-tax cost of debt? a. 4.64%b. 4.88%c. 5.14%d. 5.40%e. 5.67%

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