The pretax and the aftertax cost of debt

Assignment Help Financial Management

Reference no: EM131915118

Jiminy's Cricket Farm issued a 30-year, 8.6 percent semiannual bond 6 years ago. The bond currently sells for 90 percent of its face value. The company’s tax rate is 38 percent.

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

Aftertax cost of debt %

c. Which is more relevant, the pretax or the aftertax cost of debt?

Reference no: EM131915118

Questions Cloud

Credit sales for customers with and without credit screening : What are the increased profits by adding credit sales for customers with and without credit screening?

Convert projected franc flows into dollar flows : Convert the projected franc flows into dollar flows and calculate the NPV. What is the NPV in dollars if you convert the franc NPV to dollars?

How should the court rule in given situation : Panera, the bakery/café chain, had a clause in its lease that prevented the White City Shopping Center in Shrewsbury, Massachusetts, from renting space.

Do you think ravi actual sentence was fair or too light : Although he was not charged with causing Clementi's death, Ravi was facing a possible 10 years in state prison. Do you think Ravi's actual sentence was fair.

The pretax and the aftertax cost of debt : Jiminy's Cricket Farm issued a 30-year, 8.6 percent semiannual bond 6 years ago. Which is more relevant, the pretax or the aftertax cost of debt?

How would you rule on the appeal : Nichols, age 26, and Dobler, a minor, were guests at Maldonado's party. Dobler was served alcohol and, while intoxicated, repeatedly hit Nichols with a hammer.

What is the crossover rate between projects : What is the crossover rate between projects A and B? What is the NPV of project D if the cost of capital is 6%?

Should we remove criminal penalties from all crimes : Should we remove criminal penalties from all of the so-called victimless crimes including vagrancy, pornography, and gambling?

The minimum variance frontier collects all the portfolios : The minimum variance frontier collects all the portfolios

User Account

All Pages