What would the aftertax cost of debt be

Assignment Help Finance Basics
Reference no: EM132459889

The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 12 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 20 percent higher; that is, firms that paid 14 percent for debt last year will be paying 16.80 percent this year.

a. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year and the 20 percent increase? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

b. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 40 percent because of involvement in political activities), what would the aftertax cost of debt be? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Reference no: EM132459889

Questions Cloud

Explain and evaluate socrates claim in the apology : Explain and evaluate Socrates' claim in the Apology that "the unexamined life is not worth living for a human being," and briefly analyze particular method
Assignment - Electric Charge and Fields Questions : Assignment - Electric Charge and Fields Questions. Two small plastic spheres are given positive electrical charges. What is the charge on each sphere
Compute the yield to maturity on the old issue : Compute the yield to maturity on the old issue and use this as the yield for the new issue. (Do not round intermediate calculations.
How authoritative and credible and reliable : Briefly state specifically how this source provides evidence that strongly supports your conclusion. How current is this the source you are using?
What would the aftertax cost of debt be : If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year
Areas of the income statement and balance sheet : Next, discuss what areas of the income statement and balance sheet would be impacted by this new debt and how.
Explain how sex and gender work through each other : Name the three prominent ways in which sex/gender has been theorized, provide an example, and explain your thoughts about the ethics of this type of theory.
Explain how pascal argues for belief in god : Explain the strengths and weaknesses of other thinkers have identified in his reasoning. Is it morally permissible to believe in God
What is cultural relativism : Define What is cultural relativism? What are some (at least three) of problems with cultural relativism? Explain each,explain with an example

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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