Approximate after-tax cost of debt for new issue of bonds

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1. An issue of common stock's most recent dividend is $4.35. Its growth rate is 5.0%. What is its price if the market's rate of return is 9.6%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2. The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 33%. What would be the approximate after-tax cost of debt for a new issue of bonds? (Round your answer to 2 decimal places.)

3. A fourteen-year bond, with par value equals $1,000, pays 10% annually. If similar bonds are currently yielding 9% annually, what is the market value of the bond? Use semi-annual analysis. Use Appendix B and Appendix D. (Round "PV Factors" to 3 decimal places, intermediate calculations and final answer to 2 decimal places.)

Reference no: EM132017275

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