Analyzing the after-tax cost of debt for firm

Assignment Help Financial Management
Reference no: EM13949304

You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 10.60 percent semi-annual coupon bonds are selling at a price of $1,034.33. These bonds are the only debt outstanding for the firm.

What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

After-tax cost of debt=  %

Reference no: EM13949304

Questions Cloud

Something in the video that you found interesting : Write a 400 word essay about something in the video that you found interesting. Discuss what was said and why you find it interesting. As part of your essay, you must also include a follow up question about the topic that you would like to have be..
Define the functions of law in society : Define the functions of law in society. Define the role of law in business. Compare and contrast means for resolving domestic and foreign legal disputes
How the groups are numbered in modern periodic table : How the groups are numbered in modern periodic table? How the groups were numbered in periodic table of American system of naming? How the groups were numbered in periodic table of European system of naming? Do the groups from 3-10 have any trivial n..
Bond with a face value : A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT?
Analyzing the after-tax cost of debt for firm : You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 10.60 percent semi-annual coupon bonds are selling at a price of $1,034.33. These bonds are the only debt outstanding for the firm. What is the after-..
Prepare a cash budget for rogier inc : Prepare a cash budget for Rogier, Inc., for the month of March. Assume that Rogier, Inc., wanted a minimum cash balance of $15,000 and that it could borrow from the bank in multiples of $1,000 at an interest rate of 12 percent per year.
Net income is the firm expected to pay out as dividends : Debt and Common Equity are only used in this company. It can borrow unlimited amounts at an interest rate of 10% as long as it finances at its target capital structure which calls fo 45%debt and 55% common equity. What is the company's expected growt..
Logical appeals, based on reasons and evidence : Specifically, the textbook also discusses the difference between a textual analysis and a contextual analysis.One of the hallmarks of effective communication is the balance between appeals to an audience, the speaker's identity/authority, and the ..
Create the entity-relationship diagram for the doctors : Given the following business rules, create the Entity-relationship Diagram:

Reviews

Write a Review

Financial Management Questions & Answers

  Amount of a possible future contingency

Many firms believe that it is very difficult to estimate the amount of a possible future contingency. Should a contingent liability be reported even when the dollar amount of the loss is not known? Should it be disclosed in the notes to financial sta..

  Planning to save for retirement-withdrawal period

You are planning to save for retirement over the next 35 years. To do this, you will invest $900 per month in a stock account and $500 per month in a bond account. The return of the stock account is expected to be 11 percent, and the bond account wil..

  Find problems inherent in simpsons wacc calculation

Find problems inherent in Simpsons WACC calculation and what can you suggest to solve problems found - Simpson used the CAPM to estimate the cost of common stock.

  What is the value of their shares of stock

Paradise Adventures just paid a dividend of $2.00. They are growing rapidly and are expecting to grow dividends at 20% for the next two years and then 10% in the third year before reducing the dividends to a constant growth rate of 3%. If the require..

  Stock is divided between capital gains-dividend yield

Suppose you know that a company’s stock currently sells for $65.30 per share and the required return on the stock is 9 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If the ..

  Plans expansion-what is the weighted average cost of capital

The Black Bird Company plans an expansion. The expansion is to be financed by selling $181 million in new debt and $123 million in new common stock. The before-tax required rate of return on debt is 8.30% percent and the required rate of return on eq..

  What percentage of the portfolio is invested in stock

Stock A has an expected return of 12% and a standard deviation of 10.5%, and Stock B has an expected return of 20% and a standard deviation of 27.2%. The correlation coefficient between the two stock is -0.2. In order to produce the minimum risk port..

  What is your opinion of this strategy

Some consumers might consider purchasing a new car with a car loan, while using credit cards to cover other purchases, and making only the minimum required payment to the credit card company each month. What is your opinion of this strategy?

  Self employed certified public accountant

On December 31, 2009, Cathy Chen, a self employed certified public accountant (CPA), completed her first full year in business. During the year, she billed $360,000 for her accounting services. She had two employees: a bookkeeper and a clerical assis..

  Equipments after-tax salvage value

Kennedy Air Services is now in the final year of a project. The equipment originally cost $29 million, of which 90% has been depreciated. Kennedy can sell the used equipment today for $7.25 million, and its tax rate is 30%. What is the equipment's af..

  What is the estimated amount of purchases for quarter

Abbott & Costello has the following estimated sales: first quarter $8,100, second quarter $8,600, third quarter $9,500 & fourth quarter $11,200. Purchases are equal to 75 percent of the following quarter's sales. What is the estimated amount of purch..

  Jaedan industries has the following account balances as of

jaedan industries has the following account balances as of december 31 2010 found on page 64 amp 65 of the text. the

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd