What is the after-tax cost of capital for debt financing

Assignment Help Finance Basics
Reference no: EM132499353

Great Seneca Inc. sells $100 million worth of 25-year to maturity 6.93% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $975 for each $1,000 bond. The firm's marginal tax rate is 35%. What is the after-tax cost of capital for this debt financing?

Round the answer to two decimal places in percentage form.

Reference no: EM132499353

Questions Cloud

Find the effective annual rate of interest : Find the effective annual rate of interest (as a %, 2 decimal places) at which an amount of $2,000 today will accumulate to $4900 in 8 years.
Find the financial break-even quantity : Ignoring the effect of taxes, find the financial break-even quantity. (Do not round intermediate calculations and round your answer to 2 decimal places)
Expectancy for life insurance products : What are the consequences, negative and/or positive, of increasing life expectancy for life insurance products?
What is the total value of icarus : What is the total value of Icarus? Thereafter, operating cash flows and investment expenditures are forecast to grow in perpetuity by 4% a year.
What is the after-tax cost of capital for debt financing : The firm's marginal tax rate is 35%. What is the after-tax cost of capital for this debt financing?
Compute the efficiency variances for direct labor : Provide likely explanations for the variances. Do you have reason to be concerned about your performance evaluation? Explain.
What is the companys percentage cost of equity : What is the company's percentage cost of equity? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Differentiate between global and multicultural education : Write a 4-6 page paper in which you: Differentiate between global and multicultural education and how each was exemplified in this example.
What is olympics after-tax cost of debt : What is Olympic's after-tax cost of debt? The face value of the issue is $25 million, and the issue sells for 93% of par value. The firm's tax rate is 30%.

Reviews

Write a Review

Finance Basics Questions & Answers

  Will any accounts be misstated

At the end of May, Robertson Corporation has provided services to customers, but it has not yet billed these customers nor have any of them paid.

  What is the net cost of the machine for capital budgeting

What is the net cost of the machine for capital budgeting purposes? (That is, what is the Year 0 net cash flow?) What are the net operating cash flows in Years 1, 2, and 3? What is the terminal year cash flow? If the project's cost of capital is 12 p..

  Need to conduct a capital budgeting analysis

Since Ben Holt, Blades' chief ?nancial of?cer (CFO), believes the growth potential for the roller blade mar- ket in Thailand is very high, he, together with Blades' board of directors, has decided to invest in Thailand.

  Estimate of the stock current price

What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

  What is the present value of the annuity

What is the present value of the following annuity? $1,062 every year at the end of the year for the next 8 years, discounted back to the present at 11.92

  Credit default swaps- credit default swaps were once

credit default swaps- credit default swaps were once viewed as a great innovation for making mortgage markets more

  Number of votes needed to ensure election to the board

If the firm uses cumulative voting to elect its board, what is the minimum number of votes needed to ensure election to the board?

  Prepare closing entries and financial statements

You have been asked to record the transactions associated with this business for the month of February, prepare adjusting entries, prepare closing entries and prepare the financial statements

  What do you understand by time value of money respond with

what do you understand by time value of money. respond with at least 200 words using relevant

  Forecasting the market value of common shares

Mr. David, founder and president of Heath Farm Company dealing in healthy dairy products, a profitable business and expanding rapidly, is wondering whether the company should make its first public offer of common stock and if so at what price. The..

  What should be the amount of baruch annual contributions

Mr. Baruch expects to earn 10% per year, on average, in his mutual fund. What should be the amount of Baruch's annual contributions ?

  Factoring resource constraints into product mix decisions

Rose Incorporated manufactures two types of vases, small and large. The following per-unit data are available.

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