A company is looking to invest in a new plant in California. The plant will...
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A company is looking to invest in a new plant in California. The plant will be financed with bonds that have a 6% coupon rate and will yield 7%. The company's tax rate is 40% and it's Weighted Average Cost of Capital is 9%. It expects to earn a return on the investment in the plan of 8%. In its decision to invest or not to invest, which cost of capital % listed above should the company use to compare to the return it expects to earn on its capital of 8%? Group of answer choices The after tax bond yield of 4.2%. The bond yield of 7% The Weighted Average Cost of Capital of 9%. The bond coupon rate of 6%.''
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