Use the weighted average bond yield for your required return. The totalmarket value of debt APPLE is expected to have going into the investment is$3.5B, which includes the additional $1.5B to be taken on that is not includedin the current financial statements. The current outstanding debt has aninterest rate of 5%, while the new debt's interest rate is now expected to belower at 3%. All of the $3.5B in debt is in the form of bonds. Ignore incometax effects when calculating the required return (i.e., do not take theafter-tax cost of debt). Use current interest rates as a proxy for bond yield.


Calculatethe bond yield to utilize as your required return.