What is the firm after-tax cost of debt

Assignment Help Financial Management

Reference no: EM131339608

5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,200 face value and a 8% coupon, semiannual payment ($48 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? Round your answer to 2 decimal places. Do not round intermediate calculations.

Reference no: EM131339608

Questions Cloud

Considering three-year expansion project-what is project npv : Quad Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2.82 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life. If the required return is 12 ..

What is the company cost of preferred stock and rps : Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $74.50 per share with an annual dividend of $4.00 a share. Ignoring flotation costs, what is the company's cost of preferred stock, rps?

Provide similar yield to maturity : LL Incorporated's currently outstanding 9% coupon bonds have a yield to maturity of 14%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 30%, what is LL's after-tax cost of debt?

What is company cost of preferred stock : Barton Industries can issue perpetual preferred stock at a price of $58 per share. The stock would pay a constant annual dividend of $3.70 per share. If the firm's marginal tax rate is 40%, what is the company's cost of preferred stock?

What is the firm after-tax cost of debt : 5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,200 face value and a 8% coupon, semiannual payment ($48 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 40%, what ..

Explain how relative frequencies relate to probabilities : Explain how relative frequencies relate to probabilities - how would probability analysis help you set a budget for the 2nd year you lived in this city?

Self evaluation and resulted in personal change : Tell me about an experience you have had that led to self evaluation and resulted in personal change.- "Tell me about a time where you thought you were right but you were wrong and then you changed".

Should the us constitution provide the same protections : Should the U.S. Constitution provide the same protections for all citizens against actions of state governments, or should it be up to each state whether to protect fundamental rights for citizens within the state?

What kind of person often does this sort of work : Why did you end up doing this work? What kind of person often does this sort of work? (And would you consider yourself typical?) What do you like about this work? What is difficult about this work

User Account

All Pages