A firm has issued $45 million in long-term bonds that now have 12 years remaining until...

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Finance

A firm has issued $45 million in long-term bonds that now have12 years remaining until maturity. The bonds carry an 9% annualcoupon and are selling in the market for $1220.74. The firm alsohas $50 million in market value of common stock. For cost ofcapital purposes, what portion of the firm is debt financed andwhat is the after-tax cost of debt, if the tax rate is 35%?
52.35% debt financed; 4.12% after-tax cost of debt
47.65% debt financed; 5.85% after-tax cost of debt
90.00% debt financed; 3.17% after-tax cost of debt
47.37% debt financed; 2.06% after-tax cost of debt

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A firm has issued $45 million in long-term bonds that now have12 years remaining until maturity. The bonds carry an 9% annualcoupon and are selling in the market for $1220.74. The firm alsohas $50 million in market value of common stock. For cost ofcapital purposes, what portion of the firm is debt financed andwhat is the after-tax cost of debt, if the tax rate is 35%?52.35% debt financed; 4.12% after-tax cost of debt47.65% debt financed; 5.85% after-tax cost of debt90.00% debt financed; 3.17% after-tax cost of debt47.37% debt financed; 2.06% after-tax cost of debt