What is its pre-tax and after-tax cost of debt

Assignment Help Financial Management
Reference no: EM132049854

1. Fancy, Inc. is considering a five-year project that has initial after-tax outlay or after-tax cost of $42,000. The future after-tax cash inflows from its project for years 1 through 5 are $11,000 for each year. Fancy uses the net present value method and has a discount rate of 9.00%. Will Fancy accept the project?

2. A company has 10 year, $1000 par value bonds issued that pay an annual coupon of $60 and currently sell for $866. If the company has a 34% tax rate, what is its pre-tax and after-tax cost of debt?

Reference no: EM132049854

Questions Cloud

Prepare the journal entries for issuance of preferred stock : Pringle Corporation has been authorized to issue 23,100 shares of $100 par value, Prepare the journal entries for Issuance of preferred stock
How do you determine what year he died : Carbon-14 testing on the body of Otzi the Iceman showed the level of carbon-14 was at 52%. How do you determine what year he died?
Discuss the historical issue in the criminal justice system : For this assignment, you discuss the historical issue in the criminal justice system that you will address in the Final Paper.
Find the absolute pressure of the helium gas : The density of the surrounding air is 1.19 kg/m3. Find the absolute pressure of the helium gas.
What is its pre-tax and after-tax cost of debt : If the company has a 34% tax rate, what is its pre-tax and after-tax cost of debt?
What is the required rate of return on project : What is the required rate of return on the project? What is the required rate of return on the project if its beta is 1.8?
Calculate the electric potential energy stored : Calculate the electric potential energy stored in a capacitor that stores 3.40 x 10 to the power of negative 10 c of charge at 20.0 V
Calculate the electric force that exists between two objects : Calculate the electric force that exists between two objects that are 0.500 m apart and carry charges of 0.00450 c and 0.00240.
The idea of capitalizing business entirely with debt : What do you think about the idea of capitalizing (or funding) a business entirely with debt?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the irr for the system in alameda and los angeles

What is the LCOE for the system In Alameda and in Los Angeles? What is the IRR for the system in Alameda and Los Angeles?

  What is the break even corporate tax rate

Mantle Corp. is considering two equally risky investments: What is the break even corporate tax rate that makes the company indifferent between the two investments?

  The bond as long as yield to maturity

You would not buy the bond as long as the yield to maturity at this price is less than the coupon rate on the bond.

  The annual debt service payment

Assume the rate on the issuance of $100m of 100-year bonds is 7.5%; the annual debt service payment would be $7.505m. How high would the interest rate have to be on 30-year bonds for the annual debt service payment to be the same for both financings?

  Employees a salary enhancement package

A small internet company plans to offer its employees a salary enhancement package which has revenue sharing as its main component. Specifically, the company will set aside 1% of total sales for yearend bonuses for all of its employees. The sales are..

  Calculate the npv for both conveyor belt systems

Hagar Industrial Systems Company (HISC) is trying to decide between two different conveyor belt systems. Calculate the NPV for both conveyor belt systems.

  Some money was deposited

Some money was deposited 15 years ago at 9% interest so as to provide a payment of $7,000/year forever begining this year.

  Decrease the bid-ask spread of the currency quote

Explain whether and why the following situations for any currency will increase or decrease the bid-ask spread of the currency quote:

  Real estate firms are likely to have low costs of financial

Real estate firms are likely to have low costs of financial distress, as much of their value derives from assets that can be sold relatively easily. For low levels of debt, the risk of default remains low and the main effect of an increase in leverag..

  Revenue and cost of goods sold

Allied Chemical Company has five profit centers with the following 2013 revenue and cost of goods sold (COGS).

  Calculte the forward price today

What is the forward price today? Two months later, stock in Kyber Inc. is selling for $130. The risk-free rate remains 8%.

  European put with the same strike and same expiration date

The current spot price of a stock is $34, the expected rate of return of the stock is 8%, and the volatility of the stock is 20%. The risk-free rate is 3% for all times. Compute the price of a European call option on the stock with strike price $35 e..

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