What is the after-tax cost of debt

Assignment Help Finance Basics
Reference no: EM131466751

A firm has issued $20 million in long-term bonds that now have 10 years remaining until maturity. The bonds carry an 8% annual coupon and are selling in the market for $877.10. The firm also has $45 million in market value of common stock. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%?

Reference no: EM131466751

Questions Cloud

Discuss the principles of public speaking : Discuss the Principles of Public Speaking.Develop your speech based on the preparation outline .
What is the npv at a discount rate of zero percent : What is the NPV at a discount rate of zero percent? What is the NPV at a discount rate of 11 percent?
What hydrogen mass flow rate is required : In a hydrogen-powered rocket, hydrogen enters a nozzle at a very low velocity with a temperature and pressure of 2000°C and 6.8 MPa, respectively.
Describe the workplace conflict issue : Conflict is an integral part of our lives, and we encounter it in every aspect of our personal and professional activities.
What is the after-tax cost of debt : For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%?
Race and sex in the workplace : Discuss the interview in an organized paper, supporting your analysis of the interview with the text, lectures, and appropriate other resources.
Find nozzle discharge area and thrust developed by system : In a proposed jet propulsion system for an automobile, air is drawn in vertically through a large intake in the roof at a rate of 3 kg/s, the velocity.
What is the present value of payments : The first payment is due today and the interest rate is 12% per annum. What is the present value of his payments?
Research a biological or chemical agent : Research a biological or chemical agent, not discussed in the course, and complete a paper detailing the type of agent it is .

Reviews

Write a Review

Finance Basics Questions & Answers

  Discuss these arguments and explain the fallacy

Discuss these arguments and explain the fallacy in them.

  How incidents columnist discusses may be inconsistent

Explain how the incidents this columnist discusses may be inconsistent with the efficient markets hypothesis.- Is it possible that these incidents might have occurred even though the efficient markets hypothesis is correct?

  Forecasters predictions of inflation are notoriously

forecasters predictions of inflation are notoriously inaccurate so their expectations of inflation cannot be rational.

  Prepare an outline for a report presentation

What sequencing will you use for your presentation? Prepare an outline for your instructor's feedback.

  The sustainable rate of growth represents the rate at which

for the true false answers only submit the question number and answer -- do not include the question in your answer

  An increase in interest rates reduces thefirm''s net worth

an increase in interest rates reduces thefirm's net worth because

  Develop and describe a strategic measurement scorecard that

develop and describe a strategic measurement scorecard that might be incorporated with the financial measures applied

  Foreign companies to u.s. investors

Yankee stock issues are equity securities sold by foreign companies to U.S. investors.

  Dividend yield and capital gain rate

1. What is the most you would pay today for lob law's stock? 2. What dividend yield and capital gain rate would you expect at this price?

  What are the projects net cash flows

The project net working capital is equal to 10% of the next year's revenue and the tax-rate is 35%. What are the projects net cash flows for years 0-3? What is the IRR on this project?

  Key differences common stock and bonds

Key differences between common stock and bonds include all of the following, All of the following features may be characteristic of preferred stock.

  What is meant by an indexing portfolio strategy

Lets extend the discussion by examining the practical implications of these concepts. What is meant by an indexing portfolio strategy and what is the justification for this strategy?

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