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jdiaz197 jdiaz197
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3 years ago
Use the data provided on Cadbury to answer the question below. The risk free rate is 4.25%. The expected return on the market portfolio is 9.75%. The corporate tax rate is 40%. The face value of Cadbury's outstanding bonds is 2.450 billion pounds sterling. The coupon rate on Cadbury's bonds is 4.5%. Assume that the bonds pay annual coupons. The yield to maturity on Cadbury's bonds is 4.5%. Cadbury's bonds mature in 7 years. Cadbury has 1.650 billion common shares outstanding. The market price of Cadbury's common shares as of Dec 31, 2008 is 6.25 pounds sterling. Cadbury's Beta is 0.8. What is Cadbury's cost of debt (after-tax)?

▸ 2.70%

▸ 4.50%

▸ 7.80%

▸ 8.65%

▸ 8.70%
Textbook 
Corporate Finance Online

Corporate Finance Online


Edition: 2nd
Authors:
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kobbhykobbhy
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3 years ago
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jdiaz197 Author
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3 years ago
Brilliant ツ
dri
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Yesterday
Thanks for your help!!
jcarter
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2 hours ago
Helped a lot
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