The after-tax cost of debt

Assignment Help Financial Management
Reference no: EM13894713

The before-tax cost of debt for a firm which has a 40 percent marginal tax rate is 12 percent. The after-tax cost of debt is

4.8 percent

6.0 percent

7.2 percent

12 percent

Reference no: EM13894713

Questions Cloud

Normal good, an inferior good and a giffen good : 1.Distinguish between a normal good, an inferior good and a Giffen good. Use indifference curves to illustrate your answer.
Using MACRS depreciation method : Casa Grande Farms is considering purchasing multiple tractors for a total purchase price of $540,000. These tractors are expected to generate EBITDA of $250,000 for each of the next three years. Assuming that Casa Grande Farms depreciates these tract..
Difference between connectionless and connection-oriented : How does SSH differ from Telnet? How does HTTPS differ from HTTP?
The npv for upgrading to the new grill is closest to : Two years ago the Krusty Krab Restaurant purchased a grill for $50,000. The owner, Eugene Krabs, has learned that a new grill is available that will cook Krabby Patties twice as fast as the existing grill. If the Krusty Krab's opportunity cost of cap..
The after-tax cost of debt : The before-tax cost of debt for a firm which has a 40 percent marginal tax rate is 12 percent. The after-tax cost of debt is
Identify three issues that such a team might address : Explain why such a team is likely to be collaborative. Identify three issues that such a team might address, and explain why those issues would need feedback and iteration.
Treasury strips-what is the yield to maturity : A Treasury STRIPS is quoted at 61.159 and has 10 years until maturity. What is the yield to maturity?
Evaluating initial investment for capital budgeting project : In evaluating the initial investment for a capital budgeting project:
Probability distribution of the risky funds : The following data apply to Problems 4 through 10: A pension fund manager is con- sidering three mutual funds. The first is a stock fund, the second is a long-term govern- ment and corporate bond fund, and the third is a T-bill money market fund that..

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the standard deviation of returns-expected return

Valley Fruit Limited is currently assessing the riskiness of the market with an intention of investing. The company currently has excess cash on its balance sheet to invest. Senior management wants to invest the excess cash. Calculate the expected re..

  Time to pay off the debt

Joey realizes that he has charged too much on his credit card and has racked up $4,500 in debt. If he can pay $175 each month and the card charges 16 percent APR (compounded monthly), how long will it take him to pay off the debt?

  Assuming its historical return on assets-currently stand

Assuming IBM’s historical “LT (Long-term Debt/Equity) is 100 percent, how does it currently stand? Generally speaking, is that good or bad? Assuming its historical return on assets is 10 percent, how does it currently stand? Generally speaking, is th..

  Bonds yield to maturity in the bond matures

A bond's market price is $1,100. It has a $1,000 par value, will mature in 12 years and has a coupon interest rate of 11 percent annual interest, but makes its interest payment semiannually. what is the bond's yield] to maturity? What happens to the ..

  Return and standard deviation of optimal risky portfolio

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a sure rate of 4.8%. Draw a tangent from the ri..

  Net operating working capital behavior

Short term financial management - Read the article - Net Operating Working Capital Behavior: A First Look.

  Time value of money relevant to retirement planning

How is the time value of money relevant to retirement planning? Discuss the TVM in terms that a non-financially savvy couple in their mid-forties could understand.

  What is the gain or loss on the sale of the asset

A fixed asset has an original cost of $32,000 and is three-fourths depreciated. The asset is sold for $10,000 – show how you derived your answer. What is the gain (+) or loss (-) on the sale of the asset. What amount is recorded in the CFO section of..

  What is the effective annual rate on this loan

Suppose Community Bank offers to lend you $20,000 for one year at a nominal annual rate (annual percentage rate) of 6.00%, but you must make interest payments at the end of each month and then pay off the $20,000 principal amount at the end of the ye..

  Prepaid finance charges

"A borrower takes a $300,000 loan with fixed rate of 4% amortized with monthly payments over 30 years. There are prepaid finance charges of 1 point on the loan amount plus $1,500. Calculate the APR. [Format Answer as a percentage - X.XX]"

  Interest rates are constant

A 4-year bond with a 6.50% coupon and a 9.50% yield to maturity is currently worth $903.87, how much will it be worth 1 year from now if interest rates are constant?

  Notional principal interest rate swap

A company enters into a $35 million notional principal interest rate swap. (pay fixed, receive floating at LIBOR) What is the value of the swap?

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