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Northwest Utility Company Faces Increasing Needs For Capital Fortunately It Has An Aa3 Credit Rating The

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Data on Bond Issues
Moody ‘s
Yield to
Issue
Rating
Price
Utilities:
Maturity
Southwest electric power-7 1/4 2023
Aa2
$
920. 18
8. 66%
Pacific bell-7 3/8 2025
Aa 3
896. 25
8. 44
Pennsylvania power amp; light-8 1/2 2022
A2
995.66
8. 45
Industrials:
Johnson amp; Johnson-6 3/4 2023
Aaa
850. 24
8.35%
Dillard’s Department Stores-7 1/8 2023
A2
910.92
8. 88
Marriott Corp.-10 2015
B2
1, 060.10
9.55
a. Compute the cost of debt, Ka. (Use the accompanying table-relate to the utility bond credit rating for yield.) (Do not round
intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Cost of debt
%Financial Accounting