Pre-tax cost of debt capital, Finance Basics

Current cost of a bond: You know that the after-tax cost of debt capital for Bubbles Champagne is 7 percent. If the firm has only one issue of five-year maturity bonds outstanding, what is the current price of the bonds if the coupon rate on those bonds is 10 percent? Assume the bonds make semiannual coupon payments and the marginal tax rate is 30 percent.





(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)

1. Pre-tax cost of debt capital = %.






(Omit the dollar sign in your answer. Carry out all calculations to four decimal places and round your final answer to nearest whole dollar.)

2. Current price of the bonds = $ .
Posted Date: 6/25/2012 10:07:51 PM | Location : United States







Related Discussions:- Pre-tax cost of debt capital, Assignment Help, Ask Question on Pre-tax cost of debt capital, Get Answer, Expert's Help, Pre-tax cost of debt capital Discussions

Write discussion on Pre-tax cost of debt capital
Your posts are moderated
Related Questions
Bills of Exchange Bills of Exchange are a source of finance in specifically in the export trade. A bill of swapping is an unconditional arrange in writing addressed via one pe

1. The Marlin Company operates 50 weeks a year, and its cost of goods sold last year was $1,500,000. The firm carries six items in inventory: three raw materials, two work-in-proce

what is bank draft?How it can be prepared?

Ask questioAustralian’s Speleological App Projectn #Minimum 100 words accepted#

why prospective buyers need to see accounting information

Market Segmentation Theory This theory states as the main investors lenders and borrowers are confined to a particular segment of the market and will not change even whether t

capital structure of 38% common stock and 62% debt. A debt issue of 1000 par value, 5.6% bonds that mature in 15 years and pay annual interest will sell for $979.dividends have gro

Market For Funds Market for Funds and Financial Institutions in Middle Asia 1. Financial markets refer to an elaborate system of the financial institution and arrange

what are the difference between receipt and payment account and income and expenditure account ?

Explain about the monetary role of banks. The Monetary Role of Banks: • A bank is a financial intermediary. • Bank reserves are the currency banks hold within their va