Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Cost of Debt
The _________________ (before-tax cost of debt, after-tax cost of debt) is the interest rate that a firm pays on any new debt financing.
Revive Co. can borrow at any interest rate of 12.5% for a period of eight years. its marginal federal-plus state tax rate is 30%. What is Revive's after-tax cost of debt?
a. 7.5%
b. 8.8%
c. 12.5%
d. 8.4%
Revive Co. has outstanding 5-year no callable bonds with a face value of $1,000. These bonds have a current market price of $1,229.24 and an annual coupon rate of 10%. The company faces a tax rate of 30%. If the company wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt?
a. 3.32%
b. 3.82%
c. 3.98%
d. 2.99%
Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio. Company D's has an expected return of 9.0% and a beta of .75. The total value of the inv..
In early 2010, the possibility that Greece might default on its sovereign debt caused the spread between German and Greek debt to ____ by about ____ percentage points
The Black Bird Company plans an expansion. The expansion is to be financed by selling $87 million in new debt and $5 million in new common stock. The before-tax required rate of return on debt is 11.39% percent and the required rate of return on equi..
Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.67 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be w..
A corporate bond pays 6 percent interest. How much would a municipal bond have to pay to be equivalent to this on an after-tax basis if you are in the 15 percent tax bracket?
Scooze Inc. projects a rate of return of equity of 20%. Management plans to pay 70% of earnings as dividends. Earnings this year will be $3.00 per share, and investors expect a 12% rate of return on the stock. Calculate the sustainable growth rate as..
Talbot Industries is considering launching a new product. The new manufacturing equipment will cost $18 million, and production and sales will require an initial $4 million investment in net operating working capital. The company's tax rate is 30%. W..
George bought an investment one year ago and just calculated his return on investment. He found that his purchasing power has increased by 15% as a result of his investment. If the inflation over the period was 4%, his _______________.
Third Bank has the following balance sheet (in millions), with the risk weights in parentheses. What are the risk-adjusted on-balance-sheet assets of the bank as defined under the Basel Accord? To be adequately capitalized, what are the CET1, Tier I,..
A 30-year corporate bond sold to investors at par ($1000) with a 10 percent coupon rate is called sixteen years later at a 12 percent call premium. At the time of call, prevailing rates on comparable securities were 8 percent. If the bond's holder re..
What mutual fund would you recommend for a 65 year old retired school teacher who is extremely conservative in her investing? She doesn’t want to lose one dollar. She has retirement money to live on but she is concerned about inflation and taxes. Wha..
Chapman has a coupon rate of 9.63 it maturity 01/01/2042 Last price was $95.09 Lasst yield is 10.15% ESt spread is 7.15 UST is 30 years Est Volume is 65,275. If Chapman wants to issue new 30 year bonds today, what coupon rae would the bonds have to p..
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd