What is the firm after-tax component cost of debt

Assignment Help Financial Management
Reference no: EM131553001

Bond Yield and After-Tax Cost of Debt

A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $744.71. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC?

Reference no: EM131553001

Questions Cloud

What is the percentage cost of the preferred stock : What is the percentage cost of the preferred stock?
The state increase restrictions on the media : Under what circumstances should the state increase restrictions on the media? How would you justify these restrictions?
What communications strategies did you find most useful : What communications strategies did you find most useful? What group activity lessons did you learned that you would share with your group?
How would you evaluate the effectiveness of the campaign : What data would you collect, what measures would you consider, and how would you interpret the results so they can be applied?
What is the firm after-tax component cost of debt : What is the firm's after-tax component cost of debt for purposes of calculating the WACC?
Calculate the weight of the common stock : Calculate the weight of the common stock used in the WACC equation.
What are the momentum and the kinetic energy of that proton : A proton, (M0c2 = 938MeV) bends with a radius of curvature of 1m in a magnetic field of 0.1T.
Identify policy that would provide additional liability : Identify a policy that would provide additional liability coverage for your Homeowners, Auto, and Personal Activity Liability Loss Exposures.
What differences did you find between the articles : What differences did you find between the articles? What is the purpose of each article? Are the purposes the same or different?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the principal and interest for first month payment

Sammy is buying her first home and the selling price was agreed to at $182.000. She will put $6,000 down and has gotten a 30 year fixed rate loan at 6.5%? What is the principal and interest for the first month payment? What is the principal and inter..

  Prepare simple balance sheet of assets and liabilities

Assume that Bank A receives a primary deposit of $100,000 and that it must keep reserves of 10 percent against deposits. Prepare a simple balance sheet of assets and liabilities for the bank immediately after the deposit is received.

  According to the expectations theory of the term structure

According to the Expectations Theory of the Term Structure, anticipated price on identical 1-yr bond

  What are the arithmetic and geometric returns for stock

A stock has had returns of −19.6 percent, 29.6 percent, 31.2 percent, −10.7 percent, 35.4 percent, and 27.6 percent over the last six years. What are the arithmetic and geometric returns for the stock?

  The value of the investment at the end

Deduce the compound interest formula. If $20,000 is invested at 6.5% compound interest compounded annually calculate: The value of the investment at the end of 10 years. The number of years that the investment should be left on deposit if it is to do..

  What is the accounts payable balance at the end of january

Krista’s sells $4,000 worth of goods in December, $2,800 worth in January, $3,200 in February and $3,500 in March. The wholesale cost is 65 percent of the retail price. The firm has a receivables period of 30 days, a payables period of 60 days, and b..

  What current yield and capital gains yield will bondholders

Eight years ago, Over-the-Top Trampolines issued a 15-year bond with a $1,000 par value and 6% coupon rate. Today the going rate of interest on similar bonds is 6%. What is the bond's current value? If the market rate stays at 6% for the remainder of..

  Relates to christina mother obligations under the loan

Christina needs a loan for $10,000 to complete her master's degree. She receives a 5 year, $10,000 loan from People's Bank and Trust (PB&T), but she needs her mother to co-sign on the loan because she cannot qualify for the loan on her own. Which of ..

  The exclusive remedy rule

The exclusive remedy rule:

  Debt outstanding-what is before-tax cost of debt for olympic

Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face value of $20 million, a maturity of 10 years, and a yield to maturity of 10%. The coupons are paid annually. What is the before-tax cost of debt for Olympic? What ..

  Even though most corporate bonds

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments.

  Accompanied by issues of cost-safety-benefit and risk

Technology diffusion has been accompanied by issues of cost, safety, benefit, and risk. Federal legislation has aimed at addressing these concerns. Which do you consider to be the most important area for focus?

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