What is the new after-tax cost of debt

Reference no: EM13261617

Russell Container Corporation has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $95 and is currently selling for $920 per bond. Russell Corp. is in a 25 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.

What is the new after-tax cost of debt?

Reference no: EM13261617

Questions Cloud

Calculate the decibel level of this machine : A noisy grinding machine in a factory produces a sound intensity of 1.40 multiply.gif 10-3 W/m2. Calculate the decibel level of this machine

Explain choice in terms of current offset at summing point : In order to control the slope of a ramp produced by an integrator, the values of Vin, R, and C may be varied. Assuming a fixed value for C of 10 μF, would it be better to have a relative large Vin with a correspondingly large value of R

Determine the amount of dividends per share for common : Determine the amount of dividends per share for common and prefrred stock for all 3 years. The preferred shares are cumulative preferred.

What is the total energy of vibration : A 340kg wooden raft floats on a lake. When a 65kg man stands on the raft, it sinks 3.0cm deeper into the water. When he steps off, What is the total energy of vibration

What is the new after-tax cost of debt : The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.

What is the electrons total energy : List all the possible set of quantum numbers for a hydrogen atom with n=3. What is the electrons total energy

Explain the relationship between risk and return : Explain the relationship between risk and return. What can an investor do to reduce risk?

Determine a m-bit thermometer code for the number k : A M-bit thermometer code for the number k consists of k 1's in the least significant bit positions and M-k 0's in the more significant bit positions. A binary-to-thermometer code converter has N inputs and 2^N-1 outputs.

What limitations exist for the developed method : Is there a linear relationship between age and education, and if so, how strong is that relationship? Is it possible to predict educational level based on age? If so, what limitations exist for the developed method?

User Account

All Pages