If a zero dividend stock is purchased for $80 and sold one year later for $84, t

Q: If a zero dividend stock is purchased for $80 and sold one year later for $84, t

1. Return on stock = (Selling price - Cost price)/Cost price Return on stock = (84 - 80)/80 Return on stock = 5.00% . 2. Correct option is > 10.5% After tax cost of debt = Cost of borrowing x (1-Tax rate) After tax cost of debt = 15% x (1-30%) After tax cost of debt = 10.50%

ID: 1174554 • Letter: I

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If a zero dividend stock is purchased for $80 and sold one year later for $84, the 1 year return in ____ percent If a zero dividend stock is purchased for $80 and sold one year later for $84, the 1 year return in ____ percent ?Gmail Yahoo E outlook ? Hot artBook tmlsectionld-1008434308assignmentDueDate-2018-07-23+03%3A599%3A00&isEbookAccess; trueets 15321934270428is Or import from another browser. Import favorites porate Finance -Ross, Westerfield, Jordan, 11e, COST OF CAPITAL A company has a borrowing rate of 15 percent and a tax rate of 30 percent.What is its aftertax cost of debt? Click the answer you think is right. 10.5% 11.0%

Explanation / Answer

Return on stock = (Selling price - Cost price)/Cost price

Return on stock = (84 - 80)/80

Return on stock = 5.00%

Correct option is > 10.5%

After tax cost of debt = Cost of borrowing x (1-Tax rate)

After tax cost of debt = 15% x (1-30%)

After tax cost of debt = 10.50%

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If a zero dividend stock is purchased for $80 and sold one year later for $84, t

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