Find the yield to maturity on the debt

Assignment Help Finance Basics
Reference no: EM132515899

A firm has outstanding debt (bonds) with a coupon rate of 8%, five years until maturity, and a price of $1,000 per $1,000 face value. The coupons are paid annually. What is the after-tax cost of debt if the marginal tax rate of the firm is 25%?

Hint: First, find the yield to maturity on the debt (bonds), which is the before-tax cost of debt.

Reference no: EM132515899

Questions Cloud

What would be the value of the bond in year 5 : After 5 years, the yield to maturity of the bond is predicted to increase to 6% per annum, what would be the value of the bond in Year 5?
Determining the traditional plowback ratio : The leadingP/E is 3.33 and the stock is sold at $10.60. What is it's traditional plowback ratio?
Discuss the challenge with covid-19 in your organization : Discuss how the nursing leadership role is instrumental in providing effective healthcare delivery. Discuss the challenge with COVID-19 in your organization.
Process of ethical business : Determine the considerations for and process of ethical business decision making to balance corporate and social responsibilities, and address moral, economic,
Find the yield to maturity on the debt : Hint: First, find the yield to maturity on the debt (bonds), which is the before-tax cost of debt.
What is the weight on the 5-year zero-coupon bond : If the pension plan uses 5-year zero-coupon bond and 20-year zero coupon bond to construct the immunization position
Extemporaneous speech and manuscript speech : Your supervisor recently announced that you and a colleague, Bruce, will have an opportunity to meet with the company's CEO in 2 hours
Law and ethics in public health : Discuss how you can apply the concepts learned in this course (Law and Ethics in Public Health).
Sara and co-worker contracting the disease : How could have the organization prevented the likelihood of Sara and her co-worker contracting the disease?

Reviews

Write a Review

Finance Basics Questions & Answers

  John takes a long position in a call on a stock

John takes a long position in a call on a stock with a certain exercise price and selling a call option on the same stock with higher exercise price. Draw his total payoff diagram?

  Pay for one share of this preffered stock

Giant Company has just issued preferred stock with a par value of $100 and an annual dividend rate of 9.81 %. If your required rate of return is 12.85%, how much will you be willing to pay for one share of this preffered stock?

  What happen to a bonds price if moodys changes bond rating

Everything else being equal, what would happen to a bond's price if Moody's changes this bond rating from Baa to A? Explain.

  What is the break-even point in dollar sales

Donna Karan produces swimming trunks. The average selling price of one of the company's trunks is $49.69. The variable cost per unit is $23.09.

  How much would your capital gain be negative if a loss

If you had bought the bond the previous day, how much would your capital gain be (negative if a loss)? Select a Treasury bill maturing at least 20 weeks in the future. What is its yield to maturity?

  Examples of valid selection methods

What would be examples of valid selection methods used by the human resource department to ensure

  How much is now in that account

Joshua saved every month R200 into an account that yields 8.5% p.a. compounded monthly, How much is now in that account

  How much gm will receive after flotation costs are paid

Assume that fractions of bonds cannot be issued. Show how much of the total amount issued will consist of flotation costs and how much GM will receive after flotation costs are paid.

  Expected to maintain a constant

Siblings, Inc., is expected to maintain a constant 4.8 percent growth rate in its dividends, indefinitely. The company has a dividend yield of 6.6 percent.

  Compute jaedans debt and profitability ratios

Calculate Jaedan's free cash flow. Calculate Jaedan's liquidity. Compute Jaedan's debt and profitability ratios. Calculate Jaedan's market ratios.

  Has eliminated its exposure to exchange rate risk

The proceeds received would be reinvested by the Canadian subsidiary in Canada. In this way, Vogl Co would not have to cover Canadian dollars to U.S. dollars each year. Has eliminated its exposure to exchange rate risk by using this strategy?

  Leslies unique clothing stores offers a common stock that

leslies unique clothing stores offers a common stock that pays an annual dividend of 2.20 a share. the company has

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