Corporation is considering issuing long-term debt

Assignment Help Financial Management

Reference no: EM131621245

A Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and a 13 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 6 percent of face value. In addition, the firm would have to pay flotation costs of 6 percent of face value. The firms tax rate is 34 percent. Given this information the after tax cost of debt would be?

Please show all work.

Reference no: EM131621245

Questions Cloud

What will he the amount of each withdrawal : You plan on saving $2,000 a year (as a regular annuity) for the next 30 years. what will he the amount of each withdrawal?

Define denies them the right to cultural expression : Do you agree with the court that an English-only rule is not abusive per se to those whose primary language is not English

What amount of intercompany inventory profit must deferred : Rome Inc. owns 30% of Amber Co. and applies the equity method. What amount of intercompany inventory profit must be deferred by Rome

Discuss about the reality and historical fiction : What effects might the differences between reality and historical fiction have on the average American's perception of the past?

Corporation is considering issuing long-term debt : A Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and a 13 percent coupon rate.

Investor be concerned about sharpe or treynor ratio : how could you quantify these concerns for this investor, should the investor be concerned about the Sharpe or Treynor ratio (explain)?

French revolution shape early american politics : How did the French Revolution shape early American politics?

What are the ratios : What are the ratios in this category? If you were a manager, which ratios would you want to be used to be the basis for your performance bonuses

What percent of population is projected to be asians alone : The projected population of the United States in 2050 is 419,854,000 people and 33,588,320 Asians alone. What percent of the population is projected.

User Account

All Pages