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Cost of debt using both methods (YTM) Currently, Warren Industries can sell 10-year, $1,000-par-value bonds paying annual interest at a 13?% coupon rate. As a result of current interest rates, the bonds can be sold for $1,030 each before incurring flotation costs of $30 per bond. The firm is in the 40% tax bracket.
a. The net proceeds from the sale of the bond, Nd, is $. (Round to the nearest dollar.)
b. Using the bond's YTM, the before-tax cost of debt is %. (Round to two decimal places.)
Using the bond's YTM, the after-tax cost of debt is %. (Round to two decimal places.)
The Everglo Corp., a manufacturer of cosmetics, is financed with a 50-50 mix of debt and equity. The debt is in the form of debentures, which have a relatively weak indenture. using the money raised to attack the lucrative but very risky European mar..
We buy a car for $40,000. They charge us 8% annual interest. We pay the loan off quarterly. We want to know the effective annual ROR and the quarterly amount to pay off the loan in 6 years. Furthermore, if we had enough after 1 year, how much do we n..
Please define the concept of “decision management.” Please define the concept of “decision control.” When and why is it important to separate decision management and decision control?
An increase in assets would usually show as an outflow in the statement of cash flows. Interest income is recorded as an operating inflow of cash.
Compute the NPV for Project X with the cash flows shown below if the appropriate cost of capital is 9 percent. Time: 0 1 2 3 4 5 Cash flow: -155 -155 0 260 235 210 $503.73 $205.52 $206.53 $189.48
Blackstone Energy is planning to issue two types of 25-year, How many OID bonds must the firm issue to raise the other $3 million?
Find the break-even selling price for an investor who purchases 150 shares of a stock at $35 each and pays a 4% commission.
IbreOffice has 85,000 shares of common stock outstanding at a price of $62 a share. They also have 10,000 shares of preferred stock outstanding at a price of S85 a share. The firm has 10,000 8 percent, 20-year bonds outstanding, with a face value of ..
What is the effective interest rate of a simple discount note for $8,000, at an ordinary bank discount rate of 11%, for 120 days?
You are a young portfolio manager who has just been assigned a new portfolio. The current strategic asset allocation of the portfolio is 80% equity and 20% fixed income securities. The entire portfolio is invested in U.S securities only. What are the..
What is the estimated required rate of return on Woidtke's stock? Calculate the growth rate in dividends. Calculate the expected dividend yield.
A small business has a taxable income of $95,650 this year, and has purchased $118,450 of business equipment eligible for a section 179 deduction. What is the maximum section 179 deduction that can be taken? Taking this deduction, what is the year 1 ..
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