The effective after-tax cost of debt

Assignment Help Financial Management
Reference no: EM131523265

Laurel, Inc., has debt outstanding with a coupon rate of 6.1% and a yield to maturity of 7.2%. Its tax rate is 40%. What is Laurel's effective (after-tax) cost of debt? The effective after-tax cost of debt is %. (Round to four decimal places.)

Reference no: EM131523265

Questions Cloud

What is an estimate of growth company cost of equity : What is an estimate of Growth Company's cost of equity? What is Growth Company's cost of debt?
What is its after-tax wacc : All City Inc. is financed 35% with debt, 10% with preferred stock, and 55% with common stock. What is its after-tax WACC?
What are special risks in international investment : Investors have different ways to invest internationally. What are special risks in international investment;
The required return of levered equity : What is your estimate of High Growth's cost of equity capital?
The effective after-tax cost of debt : Its tax rate is 40%. What is Laurel's effective (after-tax) cost of debt?
Business activity to finance inventory-accounts receivable : Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable.
What would be its price under continuous compounding : What would be its price under continuous compounding of a 10% annual rate?
Calculate the net present value and profitability index : calculate the net present value and profitability index for both projects.
Prepare appropriate bad debt expense adjusting journal entry : Casilda Company uses the aging approach to estimate bad debt expense. Prepare the appropriate bad debt expense adjusting journal entry for the current year.

Reviews

Write a Review

Financial Management Questions & Answers

  Find the price of european call on futures

Find the price of European call on futures if futures price is 106 the exercise price is 100 continuously compounded risk free rate is 7.2% volatility is 0.41

  Combined federal plus state tax bracket

An investor is in a 35% combined federal plus state tax bracket. If corporate bonds offer 9.25% yields, what must municipals offer for the investor to prefer them to corporate bonds?

  About the planning to save for retirement

You are planning to save for retirement over the next 30 years. To do this, you will invest $800 a month in a stock account and $400 a month in a bond account. The return of the stock account is expected to be 10 percent, and the bond account will pa..

  More conservative assets and your annual expected return

You are going to retire in 40 years. After retirement, you need $80,000 at the end of year for 25 years. How much do you have to save for your retirement every month? Assume that you deposit your money at the end of month for 40 years and 8 percent i..

  Unlevered equity holder and levered equity holder

Who would have higher expected return between unlevered equity holder and levered equity holder?

  Depreciation change-firm net income-free cash flow to change

Last year, Stewart-Stern Inc. reported $11,250 of sales, $4,500 of operating costs other than depreciation, and $1,250 of depreciation. The company had $3,500 of bonds outstanding that carry a 6.5% interest rate, and its federal-plus-state income tax..

  Coupon rate of the new bonds be in order for issue to sell

On January 1, 2004, Pearce and Co. will issue new bonds to finance its expansion plans. Currently outstanding 9%, January 1, 2020 Pearce and Co. bonds are selling for $1,141. If interest is paid semiannually for both bonds, what must the coupon rate ..

  Key emerging performance management

Review current research published in recent (within the past 5 years) academic journal articles focusing on emergent performance management topics. These might include topics related to sustainability, ethics or any efforts to spark innovation in ..

  Using fama-french three-factor model

An analyst has modeled the stock of a company using a Fama-French three-factor model. The risk-free rate is 4%, the market return is 11%, the return on the SMB portfolio (rSMB) is 2.2%, and the return on the HML portfolio (rHML) is 5.8%. If ai = 0, b..

  What is the minimum bid per widget

A firm is considering bidding on a project to produce eight widgets per year for the next four years. In order to complete the project, the firm must lease facilities for $30,000 per year, purchase equipment that costs $100,000, as well as pay labour..

  Cash flow analysis is setting the bid price on a project

Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project...

  What was his annualized rate of return on this investment

Scott purchased 200 shares of Frozen Foods stock for $48 a share. Four months later, he received a dividend of $0.22 a share and also sold the shares for $42 each. What was his annualized rate of return on this investment?

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