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If a company has on issue debentures paying a coupon rate of 12% p.a. and the...

If a company has on issue debentures paying a coupon rate of 12% p.a. and the market yield on similar securities is 18 per cent, what is the correct cost of debt the company should use when estimating the WACC?

A. None of the given options.
B. 15%
C. 12%
D. 18%

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Solution: If a company has on issue debentures paying a coupon rate of 12% p.a. and the market yield on similar securities is

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