What is the after tax cost of debt for this firm

Assignment Help Financial Management
Reference no: EM131073540

Suppose you are trying to estimate the after tax cost of debt for a firm as part of the calculation of the Weighted Average Cost of Capital (WACC). The corporate tax rate for this firm is 37%. The firm's bonds pay interest semiannually with a 5.2% coupon rate and have a maturity of 9 years. If the annual yield to maturity of the bonds is 8.65%, what is the after tax cost of debt for this firm?

Reference no: EM131073540

Questions Cloud

Interested in taking and majoring : Can someone tell me some of the career opportunity in computer science since am interested in taking and majoring in it
Characteristics of hardware components : Bathtub Curve is used to represent the reliability characteristics of hardware components. Why is this not applicable to software modules?
What would be your recommendation regarding use of plastic : In your closing remarks, include a short catchy phase, slogan, poem, or any other creative statement to emphasize your point of view
Architecture is suitable for ft based systems : Which operating system architecture is suitable for FT based systems?
What is the after tax cost of debt for this firm : Suppose you are trying to estimate the after tax cost of debt for a firm as part of the calculation of the Weighted Average Cost of Capital (WACC). The corporate tax rate for this firm is 37%. The firm's bonds pay interest semiannually with a 5.2% co..
Multiplexer and a statistical multiplexer : Can someone please tell me the main difference between a multiplexer and a statistical multiplexer?
Calculate the total estimated amount of fraud : Download the latest Report to the Nation on Occupational Fraud and Abuse. This report gives a projection of the cost of fraud based on the percent of revenue. Explain this in terms of an example for an individual company with revenues of $25 milli..
Micro-economic feedback : Your state plans to adopt a tuition tax credit for college students. How would you estimate the revenue impact of this provision? How would the decisions to use static, micro-economic feedback, or dynamic approaches influence your estimate?
Consultant for business csu ecommerce consulting services : It is your role within the company to respond to customers that have lodged an eCommerce query that requires action. All clients that you are directed to respond to have an ongoing relationship with your company and have pre-paid blocks of time for..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the difference between a business and a pure charity

From a financial perspective, briefly describe the concept of a business. What is the difference between a business and a pure charity? What are the three legal forms of business organization and what are their advantages and disadvantages?

  What is its expected return

Expected Return A company's current stock price is $86.40 and it is likely to pay a $5.40 dividend next year. Since analysts estimate the company will have a 13% growth rate, what is its expected return?

  What does consumer protection have to do with that crisis

According to the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010). a)Do you think it will prevent a financial crisis like the one in 2007-08? What does consumer protection have to do with that crisis? What happened to banks that were ..

  General business issues

Advice for Dealing with Business Problems

  How might that change the outcome you predicted in part b

If you get this classmate as your partner on a series of projects throughout the years, rather than only once, how might that change the outcome you predicted in part b?

  Breaking up company and selling the parts create value

A multi-product company's breakup value equals the cash one could realize by splitting the company into two or more independent firms and disposing of each separately. A company becomes a candidate for a takeover when its market value falls below its..

  Contribution margin ratio

Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $187,300, how many dollars of revenue must the company generate in order to reach the break-even point?

  Cash and marketable securities worth-net working capital

Winston Electronics reported the following information at its annual meetings. The company had cash and marketable securities worth $1,236,290, accounts payables worth $4,159,780, inventory of $7,121,620, accounts receivables of $3,489,210, notes pay..

  Support-maintain or decrease the quality of life for society

Discuss how businesses can do at least two of the following; support, maintain, or decrease the quality of life for society. Discuss how non-profit organizations can do at least two of the following; support, maintain, or decrease the quality of life..

  Calculate the bonds price today

General Mills has a $1,000 par value, 12 year bond outstanding with an annual coupon rate of 3.60% per year paid semi annually. Market interest rates on similar bonds are 12.70%. Calculate the bonds price today.

  What is the maximum profit and loss for this position

An investor purchases a stock for $56 and a put option for $.80 with a strike price of $50. The investor also sells a call option for $.80 with a strike price of $66. What is the maximum profit and loss for this position?

  Technical efficiency can be defined

Technical efficiency can be defined as: a. The difference between the total profit change and the profit-linked productivity change. b. The point at which, for any mix of inputs that will produce a given output, no more of any one input is used than ..

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