What is before-tax cost of capital for this debt financing

Assignment Help Financial Management

Reference no: EM131188092

Black Hill Inc. sells $100 million worth of 13-year to maturity 11.39% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $973 for each $1,000 bond. What is the before-tax cost of capital for this debt financing?

Reference no: EM131188092

Questions Cloud

What is the theoretical futures price : Suppose there is a financial asset ABC, which is the underlying asset for a futures contract with settlement six months from now. You know the following about this financial asset and the futures contract: What is the theoretical (or equilibrium) fut..

Cost volume and profit analysis : Cost-Volume- Profit Analysis-Cost-Volume- Profit (CVP) is an excellent tool for analyzing short-term financial decisions. Assume the following current information: sales price per unit $7.50 total fixed costs $250,000 unit volume 125,000 What does th..

What is the companys cost of equity capital : Crosby Industries has a debt-equity ratio of 1.5. Its WACC is 9.1% and its cost of debt is 5.5%. There is no corporate tax. What is the company's cost of equity capital? What would the cost of equity be if the debt-equity ratio were 2.0?

Calculate cost of common equity financing using gordon model : Last year the Black Water Inc. paid dividends $2.92. Company's dividends are expected to grow at an annual rate of 3% forever. The compnay's common stock is currently selling on the market for $86.52. The investments banker will charge flotation cost..

What is before-tax cost of capital for this debt financing : Black Hill Inc. sells $100 million worth of 13-year to maturity 11.39% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $973 for each $1,000 bond. What is the before-tax cost of capital for this debt financing?

After-tax market rate of return on development investments : The research and development division of a large corporation is considering the purchase of a new tunneling X-ray microscope for $320,125. The projected net benefits from gains in materials engineering is projected to be $127,000 in today’s real doll..

Annual dividends on this preferred stock : Golden Rod Corps preferred stock is selling for $65.26. The company pays $5.25 annual dividends on this preferred stock. Which rate of return does the investor expect to receive on this stock if the stock is purchased today?

What will your homemade dividend be in two years : You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.50 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent. Suppose you ..

Effective annual interest rate on this lending arrangement : Come and Go Bank offers your firm a discount interest loan at 8 percent for up to $15 million, and in addition requires you to maintain a 4 percent compensating balance against the amount borrowed. What is the effective annual interest rate on this l..

User Account

All Pages