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ABC INC. 2016 Liabilities and Equity Accounts payable* $10, 000, 000 Accruals 59, 000, 000 Current Liabilities $19, 000, 000 Long - term debt $40,...

Please find the after tax cost of debt using current market YTM with the following information

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ABC INC.
2016
Liabilities and Equity
Accounts payable*
$10, 000, 000
Accruals
59, 000, 000
Current Liabilities
$19, 000, 000
Long - term debt
$40, 000, 000
Total Liabilities
$59, 000, 000
Preferred stock
5, 000, 000
Common Stock
30, 000, 000
Retained earnings
45, 000, 000
Total common equity*
$75, 000, 000
Total liabilities & equity*
$139, 000, 000
INPUT DATA
EPS
$1. 60
Bonds outstanding ( $1 , 000 par value , noncallable )*
40, 000
Do
50. 70
Bond Coupon rate ( payable semiannually* )
5. 65%
PO
$15. 00
Market price of the bonds*
5881. 00
7.5%
Flotation cost for common
9.090
8
Common shares outstanding
10, 000, 000
Company beta
1 . 4
Price of the Preferred , P .
$30. 00
Market risk premium , I'M - I'RE
6. 090
Do ( preferred dividend )
52.75
Risk - free rate , I'RE
4.5%/0
\Preferred shares outstanding*
200, 000
Tax Rate
25%

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b . Calculate the after- tax cost of debt using current market > I'M. Assume a 20 - year maturity*

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