The after-tax cost of debt is what percent

Assignment Help Financial Management
Reference no: EM13850376

A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1128 and will mature in 10 years. The firm marginal tax rate is 34 percent. The after-tax cost of debt is what percent?

Reference no: EM13850376

Questions Cloud

Computing interest tax savings : (Computing interest tax savings) Dharma Supply has earnings before interest and taxes(EBIT)of $531,000, interest expenses of $313,000, and faces a corporate tax rate of 36 percent. What would Dharma's net income be if it didn't have any debt (and con..
Record the entry for the issuance of the bonds : Dillard Co. issued $20,000,000 of 5-year, 14% callable bonds on April 1, 2014, at a market rate of 12%. Interest is payable semi-annually on September 30 and March 31. Record the entry for the issuance of the bonds. Record the entries for interest pa..
After tax-cost of debt : A bond that has a $1000 par value (face value)and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1128 and will mature in 10 years. The firm margina..
What is the market value of the companys debt : Bennington Industrial Machines issued 151,000 zero coupon bonds four years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.1 percent. Interest rates have recently increased, and the bonds now have a yield to maturity ..
The after-tax cost of debt is what percent : A bond that has a $1000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1128 and will mature in 10 years. The firm margin..
Stock portfolio invested : You own a stock portfolio invested 30 percent in Stock Q, 20 percent in Stock R, 30 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are .89, 1.22, 1.06, and 1.24, respectively. What is the portfolio beta?
Risk for high medical expenditures : The law now gives a worker who becomes unemployed the right to buy continuing health insurance coverage after leaving the company. Why might it be rational for a factory worker who loses his or her job to give up this legal right to purchase coverage..
Explain the cash conversion cycle and net working capital : Explain the cash conversion cycle (CCC) and net working capital. Why is this important to the contemporary executive? How do executive decisions regarding CCC and net working capital affect the company?
It cost you to buy seat if company uses straight votind : After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. If Schenkel has 445,000 shares out..

Reviews

Write a Review

Financial Management Questions & Answers

  Expected salvage value-plant and equipment

The Chester Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the book value of this purchase (exclude all other pla..

  Construct two financing plans-one conservative

Christensen & Assoc. is developing an asset financing plan. Christensen has $1,000,000 in current assets, of which 15% are permanent, and $700,000 in fixed assets. The current long-term rate is 9%, and the current short-term rate is 6.5%. Christensen..

  The total amount clay must pay immediately

Clay Harden borrowed $34,000 from a bank at an interest rate of 5% compounded monthly. The loan will be repaid in 36 equal monthly installments over three years. The total amount Clay must pay immediately after his 20th payment will be $_____.

  International trade agreements eliminate trade barriers

international trade agreements eliminate trade barriers between countries promote investments infuse competitiveness

  Cash flows are deposited

$1,200 is received at the beginning of year 1, $2,200 is received at the beginning of year 2, and $3,300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, their combined future value at the end of year 3 is ____..

  In an efficient market-price of a security

In an efficient market, the price of a security will:

  Critically evaluate the role and function of finance

Critically evaluate the role and function of finance, including the presentation and analysis of financial information, in sustaining and contributing towards the competitive advantage of organisations...

  Explain how earnings available to common stockholders

Explain how earnings available to common stockholders and common stock dividends paid from the current income statement affect the balance sheet item retained earnings.

  Describe how the internal rate of return

Describe how the Internal Rate of Return is calculated and describe the information this measure provides about a sequence of cash flows. What is the IRR criterion decision rule? What is the relationship between IRR and NPV and are there any situatio..

  Equipment costs-what is the profit for the company

ABC company is to sell a piece of equipment for 100,000$, the company will receive the payment five years from today. The equipment costs 70,000$ to produce. If the appropriate discount rate is 9.45%, what is the profit for the company?

  Interest is credited at an annual effective rate

The proceeds of a 10,000 death benefit are left on deposit with an insurance company for seven years at an effective annual interest rate of 5%. The balance at the end of seven years is paid to the beneficiary in 120 equal monthly payments of X, with..

  Accounting and finance for managers course has paid off

Your grandfather has decided to give you some money, but he wants to see if your Accounting and Finance for Managers course has paid off. He is giving you the choice of (a) $7000 today (b) $10000 in 5 years or (c) $750 semi-annually for 6 years.

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