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Running head: COLEMAN TECHNOLOGIES INC.
Coleman Technologies, Inc.
A. (1) What sources of capital should be included when you estimate Coleman’s WACC?
Because the weighted average cost of capital is typically concerned with long-term matters, it
would make sense to analyze whatever forms of capital are utilized in order to pay for assets that
last a long time. In the case of Coleman, this would be both common and preferred stock as well as
long-term debt in the form of bonds.
B. What is the market interest rate on Coleman’s debt and its component cost of debt?
As the below formula in Excel shows, the semiannual market interest rate of Coleman’s debt is 5%.
This would then need to be doubled to reach the annual market interest rate of 10%. Finally, the
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