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The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. the firm can sell new $1000 par value bonds with a 15 year maturity at a price of $948 that carry a coupon interest rate of 12.3 percent that is paid semiannually. If the company is in a 34 percent tax bracket, what is the after tax cost of capital to Walgreen for the bonds?
The after tax cost of debt is _% (Round to two Decimal places)
The Yeild to maturirty on the bond with the cusip 855244AD1 is less than the coupon on the bond. A firm has a cost of equity of 13 percent, a cost of preferred of 11 percent, and an aftertax cost of debt of 6 percent. Givin this, which one of the fol..
One year ago, the Chinese e-commerce company Alibaba Group floated its shares in the biggest Initial Public Offering in US history. Alibaba Group priced its shares at $68 raising $21.8 bn and valuing the company at $167.6 bn. What is the payout ratio..
Suppose BETA (a multinational manufacturer and marketer of consumer and professional products) can lease a new computer data processing system for $975,000 per year for five years under an operating lease. Alternatively, it can purchase the system fo..
The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.30 above full cost. Management estimates that the variable cost of the globe will be $70 per unit and fixed costs per year will ..
Leisure Lodge Corporation is expected to pay the following dividends over the next four years: $24, $15, $5.6 and $2.8. Afterwards, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the s..
A bank offers two 30 year, fixed rate, fully amortizing LPMs: an 85% LTV loan at 6%, and an 80% LTV loan at 5.5%. What is the marginal cost of borrowing if the loan is going to be held for 10 years?
Teresina Company has debt/assets ratio 60%, which is too high and it should be at 55% to be optimal. This debt reduction should also reduce the bankruptcy costs by $25 million. At present, Teresina has 6 million shares of common stock selling at $45 ..
Please list all primary authority relied upon in completing (b) and (c): b) Timon decides to sell 5 acres of land for $100,000. The cost basis for the land is $37,500. Timon agrees to sell the property for four equal payments of $25,000 - one now and..
The Cycle Stop has 1,600 shares outstanding at a market price per share of $8.48. Kate's Wheels has 1,750 shares outstanding at a market price of $13 a share. Neither firm has any debt. Kate's Wheels is acquiring The Cycle Stop for $15,000 in cash. W..
Currently, you can exchange €100 for $134.15. The inflation rate in Euroland is expected to be 3.1 percent as compared to 3.6 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be five years from ..
If the price of a fixed factor of production increased by 50%, what effect would this have on the marginal coast schedule facing a firm? a. None, because fixed costs don't afftect marginal costs b. marginal cost would increase by 50%, c. marginal cos..
Thompson & Jones has earnings before interest and taxes of $149,000. Both the book and the market value of debt is $265,000. The unlevered cost of equity is 13.5 percent while the pre-tax cost of debt is 9 percent. The tax rate is 34 percent. What is..
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