The coupon rate on an issue of debt is 12 the yield to

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Reference no: EM13619372

1. Assume a corporation has earnings before depreciation and taxes of $130,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?

  • $106,800
  • $97,800
  • $103,000
  • $107,600

2. The pre-tax cost of debt for a new issue of debt is determined by

  • the investor's required rate of return on issued stock.
  • the coupon rate of existing debt.
  • the yield to maturity of outstanding bonds.
  • all of these.

3. Financial capital does not include

  • preferred stock.
  • working capital.
  • stock.
  • bonds.

4. Firm X has a tax rate of 26%. The price of its new preferred stock is $60 and its flotation cost is $4.00. The cost of new preferred stock is 14%. What is the firm's dividend? (Round your answer to 2 decimal places.)

  • $7.84
  • $9.99
  • $6.49
  • $9.29

5. The coupon rate on an issue of debt is 12%. The yield to maturity on this issue is 11%. The corporate tax rate is 33%. What would be the approximate after-tax cost of debt for a new issue of bonds? (Round your answer to 2 decimal places.)

  • 6.02%
  • 7.37%
  • 9.52%
  • 8.82%

Reference no: EM13619372

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