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Airborne Airlines Inc. has a $1,000 par value bond outstanding with 30 years to maturity. The bond carries an annual interest payment of $110 and is currently selling for $850. Airborne is in a 25 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.
a. Compute the yield to maturity on the old issue and use this as the yield for the new issue. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. Make the appropriate tax adjustment to determine the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
The Athens Airline Company has consulted with its investment bankers and determined that they could issue new debt with a yield of 8%. If Athens' marginal tax rate is 40%, what is the after-tax cost of debt to Athens?
Tonia saved $47,000 for college and wish to use $15,000 per year. If you use the money as an ordinary annuity and earn 6.15% on your investment, how many years will your annuity last? Use a calculator to determine your answer.
Thompson, Inc. has Return on Equity (ROE) = 17 percent and an equity multiplier = 2.3. Compute Thompson's Return on Assets (ROA)?
Another 10-year bond has an 8% semi-annual coupon. This bond is selling at par value. Both bonds have the same risk and thus same required return. What should be the price of the first bond?
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your employer contributes 50 a week to your retirement plan. assume that you work for your employer for another 20
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Financial statements of a of an electric or other regulated energy utility company - Calculate the revenue requirement (cost of service) and rate base of the utility from the information.
What option strategies/positions did you select and why? What stock(s) did you select and why?
Gold Mining Company is seeking to increase $10,000,000 through a rights offering. The firm presently has 1,000,000 shares of common stock outstanding at a current market price of $25 per share.
Cash receipts from interest and dividends are classified and When equipment is sold for cash, the amount received is reflected as a cash
Your supervisor has asked you to make some recommendations regarding the leadership skills necessary to successfully work through the merger at Banks. You have been asked to develop a standardized method of personnel selection for their hiring nee..
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