What is a major corporation that includes a number of smaller companies in unrelated industries?

a.

a franchise

b.

a conglomerate

c.

a consumer mandate

d.

none of the above

A. 5.42%

B. 3.52%

Explanation:

A. Calculation for the companys pretax cost of debt

Using this formula

Pretax cost of debt= [Coupon payment +(Face value - price/Number of years)]/[(Face value - price)/2]

Let plug in the formula

Pretax cost of debt = (6%+((100%-107%)/18 years))/((100%+107%)/2)

Pretax cost of debt = 5.42%

Therefore the Pretax cost of debt will be 5.42%

B. Calculation for the aftertax cost of debt

After tax cost of debt = 5.42%*(1-35%)

After tax cost of debt = 5.42%*65%

After tax cost of debt = 3.52%

Therefore the After tax cost of debt will be 3.52%