User Account

All Pages

What is avicorp pre-tax cost of debt

Assignment Help Finance Basics
Reference no: EM133121058

Avicorp has a $14.2 million debt issue outstanding, with a 5.9% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 93% of par value.

a. What is Avicorp's pre-tax cost of debt? Note: Compute the effective annual return.

b. If Avicorp faces a 40% tax rate, what is its after-tax cost of debt? Note: Assume that the firm will always be able to utilize its full interest tax shield.

Reference no: EM133121058

Questions Cloud

Assignment on dividend h model : Oneida Inc, the world's largest producer of stainless steel and silverplated flatware, reported earnings per share of $0.80 in 1993, and paid dividends per shar
Compute the return on common stockholders equity : Total liabilities and stockholders' equity $2,000,000 and Total stockholders' equity $1,200,000. Compute the return on common stockholders equity
Information on the yield curve : This information on the yield curve applies to all questions below: interest rates for different maturities (1yr, 2, 3, 4, 5) are (1.0%, 2.8, 4.5, 4.7, 4.0) res
Determine the after-tax cash flows : An investment of $600,000 is made in equipment that qualifies as 3-year equipment for MACRS-GDS depreciation. The before-tax cash flows, measured in constant do
What is avicorp pre-tax cost of debt : Avicorp has a $14.2 million debt issue outstanding, with a 5.9% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months
Form of a single balloon payment : You need a 30-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 7.5 percent APR for this 360-month loan,
Calculate gain-loss that you will realize on investment : You purchase one Blue Bell Inc. September 120 put contract for a premium of $6.68. You hold the option until the expiration date when Blue Bell stock sells for
Find out how the value of his account will vary : Joe's money market account performed at 4 percent in 2013 and 6 percent in 2014, Find out how the value of his account will vary
What is the required return on xyz equity : XYZ Inc. is expected to pay no dividends for the next 5 years. However, at the end of the sixth year (at time 6), the company is expected to pay a dividend of $

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate net present value of flotation cost

If the cost of debt is 5.4% and corporate tax is 38%, calculate the net present value of the flotation cost.

  What would your total rate of return be after one year

What would your total rate of return be after one year (be sure to break up the total rate of return into its respective cash flow pieces so we know the source)

  What are the potential financial risks of avoiding

1. What are the potential financial risks of avoiding taxes illegally?

  What type of data would the survey represented and why

What types of data (categorical, ordinal, interval, or ratio) would each of the survey items represent and why?

  Develop risk appetite or risk threshold

Are you willing to take on more risk with the hopes of increasing the return on investment (ROI)? Please discuss.

  Suppose that a manufacturer is going to produce a part

suppose that a manufacturer is going to produce a part which is a component of a number of his assembled products. the

  What is their yield to call

Thatcher Corporation's bonds will mature in 12 years. The bonds have a face value of $1,000 and an 11.5% coupon rate, paid semiannually. The price of the bonds is $1,050. The bonds are callable in 5 years at a call price of $1,050. Round your answ..

  Find the current share price

Baruk Industries has no cash and a debt obligation of $36 million that is now due. The market price of Baruk's assets is $81 million, and the company has no other liabilities.

  Listing and continuation requirements of the nyse exist

Why do the top listing and continuation requirements of the NYSE exist? How do these requirements affect the capital structure of a multinational firm?

  What is your strategy to help debtors

The Covid-19 pandemic has greatly affected the economic growth of many countries.

  Calculate the annual cash flow from assets

Assume that a publicly traded technology company has 2,000,000 shares outstanding and faces a marginal tax rate of 25%.

  Assuming an annual discount rate

1. What is the present value of $ 55,000 to be received 5 years from today, assuming an annual discount rate of 9 percent? Round your answer to 2 decimal places; for example 2345.25.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd