User Account

All Pages

Compute for the cost of debt

Assignment Help Accounting Basics
Reference no: EM132737000

Problem - Consider a company with debt and equity of 20,000,000 and 50,000,000 respectively. A company enjoy a 12% interest rate for its liability. The market have a beta of 2.45, the risk free rate is at 5% while the equity premium is 4%. The tax rate is at 30%. Compute for the cost of debt?

a. 9.80%

b. 6 75%

c. 8 40%

d. 8.35%

Reference no: EM132737000

Questions Cloud

Compute cost of goods sold for january : Alta Ski Company's inventory records contained the following information regarding its latest ski model. Compute cost of goods sold for January
Describe the organizational structure and design : Describe the organizational structure and design. Examine the organization's differentiation and growth strategy.
Identify and explain five weaknesses in fragrant sales : Fragrant Scents Co (Fragrant) manufactures and sells luxury toiletries. Identify and explain FIVE (5) weaknesses in Fragrant sales and receivables system
Connecting with a cultural and ethnically : International business means connecting with a cultural and ethnically diverse audience and clientele.
Compute for the cost of debt : The market have a beta of 2.45, the risk free rate is at 5% while the equity premium is 4%. The tax rate is at 30%. Compute for the cost of debt
Calculate ending inventory balance for Sandhill Corporation : Calculate the ending inventory balance for Sandhill Corporation, assuming the company uses a periodic inventory system and the weighted average cost formula
What is the cost of goods sold : Question - If Tonya purchased 200 decorative pillows at $12 each and sold 75 of the pillows for $20 each, what is the cost of goods sold
How consumer behavior drives other consumers : Consider how consumer behavior drives other consumers. In these rare occurrences like the current experience,
Show how the truck would be reported in the December : Assume that Novak uses the straight-line method. Show how the truck would be reported in the December 31, 2020, balance sheet

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd