The Outstanding Debt of Berstin Corp

question 34

Multiple Choice

The outstanding debt of Berstin Corp. has ten years to maturity, a current yield of 7%, and a price of $95. What is the pretax cost of debt if the tax rate is 30%.

• A) 4.9%
• B) 6.5%
• C) 7.0%
• D) 7.37%

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Definitions:

Nonrenewable Resource

A natural resource that cannot be replenished or regenerated at the same rate at which it is consumed, such as oil, natural gas, and minerals.

Ethanol

A renewable fuel made from various plant materials collectively known as "biomass."

Economically Viable

A situation or project that is financially sustainable, able to generate revenue that exceeds its operating costs.

Nonrenewable Natural Resource

A natural resource that cannot be replaced or replenished once it is extracted or consumed, such as fossil fuels or minerals.