AirJet Best Parts Inc. is now considering that the appropriate discount rate for

Question

AirJet Best Parts Inc. is now considering that the appropriate discount rate for the new machine should be the cost of capital and would like to determine it. You will assist in the process of obtaining this rate. 1. Compute the cost of debt. Assume AirJet Best Parts Inc. is considering issuing new bonds. Select current bonds from one of the main competitors as a benchmark. Key competitors include Raytheon, Boeing, Lockheed Martin, and the Northrop Grumman Corporation. a. What is the YTM of the competitor

Explanation / Answer

the highest possible creditworthiness. You may assume that new bonds issued byAirJet Best Parts, Inc. are of similar risk and will require the same return. (5 pts)

answer 5.50%

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