Issued bond-what is the aftertax cost of debt

Assignment Help Financial Management
Reference no: EM131063378

Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 35 percent.

a. What is the pretax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Pretax cost of debt % ?

b. What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Aftertax cost of debt % ?

Reference no: EM131063378

Questions Cloud

Major information security threats : Write a 3-to 4-page paper on at least three major information security threats that a specific organization you choose faces today. This portion of the assignment should provide a foundation for the sections to be added in Weeks 3 and 4.
Determine the appropriate amounts to complete the schedule : Determine the appropriate amounts to complete the following schedule. Show computations, and round to the nearest dollar.
What is the companys cost of equity : The Absolute Zero Co. just issued a dividend of $3.40 per share on its common stock. The company is expected to maintain a constant 7 percent growth rate in its dividends indefinitely. If the stock sells for $68 a share, what is the company’s cost of..
Why do they believe it pays to pay differently : Think of a company that follows a lag policy and a company that follows a lead policy. Why do they believe it pays to pay differently? Can you think of any companies that follow performance driven and/or work/life balance policies?
Issued bond-what is the aftertax cost of debt : Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt?
Discuss the exercise of freedom of expressions by some media : Discuss the exercise of freedom of expressions by some media
Regulating consumer privacy in companies : Using ethical philosophies, please discuss the ethical issues involved with companies that manage genetic products. Discuss what legal structures are currently in place regulating consumer privacy in companies handling genetic products.
Implement key exchange using the diffie-hellman algorithm : Implement key exchange using the Diffie-Hellman algorithm, when peer-to-peer connections are made between bots. Achieve con dentiality through encryption of the client-server communications with an appropriate block or stream cipher
What is the tailor muscle of the body : What is the tailor muscle of the body?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the estimated regression line

What is the estimated regression line? What does the coefficient of square feet represent?

  Various discounting periods-semi annual compounding

Present value for various discounting periods-Find the present value of $800 due in the future under each of these conditions: 15% nominal rate, semi annual compounding, discounted back 10 years.

  Evaluating project for ultimate recreational tennis racket

You are evaluating a project for The Ultimate recreational tennis racket, guaranteed to correct that wimpy backhand. You estimate the sales price of The Ultimate to be $420 per unit and sales volume to be 1,000 units in year 1; 1,250 units in year 2;..

  Explain the impact on the banks net interest

Suppose that a bank has $5 billion of one-year loans and $30 billion of five-year loans. These are financed by $25 billion of one-year deposits and $10 billion of five –year deposits. Explain the impact on the bank’s net interest income of interest r..

  What is amount of dividends common shareholders will receive

The shareholders' equity of Green Corporation includes $480,000 of $1 par common stock and $590,000 par value of 7% cumulative preferred stock. The board of directors of Green declared cash dividends of $69,000 in 2013 after paying $39,000 cash divid..

  Bethany opened a store credit card to purchase a tv for 589

bethany opened a store credit card to purchase a tv for 589. she put the entire purchase on the credit card. her apr is

  About the cash budgeting

Avallone’s Pool Services Co. had sales of $2 million in March and $2.2 million in April. Expected sales for the next three months are $2.4 million, $2.5 million, and $2.7 million. Avallone’s has cash receipts from other sources of $100,000 per month...

  Using all of the least favorable variables at the same time

During a presentation where projects are being considered, an analyst runs a model using all of the least favorable variables at the same time, then, runs the model with the most favorable variables. We could call this

  Expected to grow at rate-growth rate falling off to constant

Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 24 percent for the next three years, with the growth rate falling off to a constant 7 percent thereafter. If the required return is 11 percent, and the company just paid a di..

  Does a principal-agent relationship exist among the parties

Kenny Willis and his neighbours, Rick and Joyce Taylor, were good friends. Rick helped Kenny repair his truck and Kenny cut the Taylors’s yard because they did not own a lawnmower. Does a principal-agent relationship exist among the parties?

  Dividend growth rate is expected to be constant

Ackert Company's last dividend was $0.50. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return (r) is 12.0%. What is the best estimat..

  Lastly plot the security market line for market

Lastly plot the security market line (SML) for a market that has a risk free rate of 5% and a market risk premium of 7%. Make sure to label the x and y-axis as well as the risk-free rate and the market return on the SML.

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