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Sprint Nextel Corporation (S) has $22.1 billion in total debt (which approximates its market value.) Each year this debt costs the company about $1.5 billion in interest expense. The company's market capitalization approximates $17.2 billion, its market beta is estimated 2.12, and its marginal tax rate is 35%. Assume that the risk-free rate equals 4.6% and the market premium equals 5%.

(a) Estimate Sprint Nextel's cost of debt capital. (Round your answer to one decimal place.)

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Originally Posted by teacherjenn4

You need to attempt to solve your problem. We help, but don't give answers on this site.

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OK.I will try again.