Find the net proceeds from the sale of each bond

Assignment Help Finance Basics
Reference no: EM13302006

At the current time Warren Industries can issue 15-year, $1,000 par-value bonds paying annual interest at a 12% coupon rate. As a result of current interest rates, the bonds can be sold for $1,010 each. Flotation costs of $30 per bond will be incurred in the process (which implies that f = 2.97%, or 0.0297 in decimal form) and the firm is in a 40% tax bracket. Show work

(a) Find the net proceeds from the sale of each bond for Warren Industries.

(b) Calculate the before-tax and the after-tax cost of debt for Warren Industries.

 

Reference no: EM13302006

Questions Cloud

Explain the relevant facts and decision of the court : Identify if this is a civil or criminal dispute and explain the relevant facts and decision of the court
Determine what must the pipe diameter be : If a flow of 5.0 cfs is to be carried by an 11000 ft cast-iron pipeline without exceeding a head loss of 137 ft, what must the pipe diameter be
What is the annual operating cash flow : The machine is expected to increase ABC's sales revenues by $1,890,000 per year; operating costs excluding depreciation are estimated at $454,600 per year. Assume that the firm's tax rate is 40%. What is the annual operating cash flow?
Determine the angular separation of two spectral lines : What is the angular separation of two spectral lines of wavelengths 439 nm and 395 nm formed in order m=2 with a 367 line/mm grating
Find the net proceeds from the sale of each bond : Flotation costs of $30 per bond will be incurred in the process (which implies that f = 2.97%, or 0.0297 in decimal form) and the firm is in a 40% tax bracket.
Draw a graph showing the effluent concentration as function : Draw a graph showing the effluent concentration as a function of time for : a. Zero order CMFR and PFR with the same influent concentration and reaction rate. b. First order CMFR and PFR with the same influent concentration and reaction rate.
What is the angle of this force on the ladder : A 76 kg window cleaner uses a 13 kg ladder that is 5.0 m long. He places one end on the ground 3.0 m from a wall, What is the angle of this force on the ladder
Calculate the angles made by f with the positive x : A force is specified by the vector F= 120i-160j+80k lb. Calculate the angles made by F with the positive x-,y-, and z- axes.
What is an accessory and conspiracy : What is an Accessory? What is a Principal Question. What is an Accomplice? Define Conspiracy?

Reviews

Write a Review

Finance Basics Questions & Answers

  Relationship between inventory turnover and purchasing needs

Discuss and explain to me the relationship between inventory turnover and purchasing needs and determine the advantage and disadvantage of level production schedules in firms with cyclical sales?

  Calculate the contribution margin for each copy

Fixed expenses for each new edition of the book, Calculate the contribution margin for each copy of the book?

  What is the realized return on abc investment

What is the realized return on ABC's investment? b) The firm does far better than expected and bondholders receive all of the promised interest and principal payments. What is the realized return on ABC's investment?

  Describe the logic behind net present value

Determine the modified internal rate of return for each project. Should they be accepted. Do you feel it is better evaluation technique than the internal rate of return? Why or why not?

  What is the firms sales to working capital ratio

A firm has sales of $2 million per year. Its current assets total $5 million and it current liabilities total $2 million. What is the firm's Sales to working capital ratio?

  What dollar intrinsic value should melanie place

Melanie Gibson places a nominal annual required rate of return of 14 percent on these bonds. What dollar intrinsic value should Melanie place on one of these bonds (assuming semiannual discounting)?

  What is the red dirt brewery terminal or horizon value

What percent ownership interest should Roger be willing to give to a venture investor, Syd, for his $500,000 investment?

  Prepare an outline to hand out at the session

I need help creating an outline for the below data. You are a assistant manager of Human Resources for this regional office of Cost Club.

  Find the duration of the plan obligations

A pension plan is obligated to make disbursements of $2.6 million, $3.6 million, and $2.6 million at the end of each of the next three years, respectively. Find the duration of the plan's obligations if the interest rate is 7% annually.

  Estimate the expected inflation rate in united states

A United State corporation can borrow 10,000 pounds in Great Britain for 6 percent interest, paying back 10,600 pounds in one year. The United State corporation can borrow an equivalent amount of U.S dollars in the United States and pay 13% interest.

  Prepare a table to summarize the preceding transactions

Expert Consulting Services Corporation was organized on March 1, 2010 by two former college roommates. The company provides computer consulting services to small businesses.

  Money-bond-stock and mortgage markets

The critical importance of money, bond, stock and mortgage markets as potential investment options is highlighted in terms of their impact on financial sector. Describe the linkages between each market, and how investors' choices would be affected.

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