What is the after-tax cost of debt

Assignment Help Financial Management

Reference no: EM13838021

QUESTION 1:

ABC, Inc., has 168 shares of common stock outstanding at a price of $33 a share. They also have 272 shares of preferred stock outstanding at a price of $71 a share. There are 123, 8 percent bonds outstanding that are priced at $23. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 2:

The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 3:

The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 4:

The before-tax cost of debt is 15.7 percent. What is the after-tax cost of debt if the tax rate is 46 percent?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 5:

You purchased the stock of Sargent Motors at a price of $24.9 one year ago today. If you sell the stock today for $27, what is your holding period return?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 6:

ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 6 percent each year indefinitely. What is the firm's cost of equity if the stock is selling for $39 a share?

Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 7:

You were hired as a consultant to ABC Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The before-tax cost of debt is 8.00%, the cost of preferred is 7.50%, and the cost of common is 12.75%. What is its WACC if the tax rate is 25%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 8:

The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 9:

You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 10:

Several years ago, the ABC Company sold a $1,000 par value bond that now has 15 years to maturity and a 6.50% annual coupon that is paid semiannually. The bond currently sells for $980 and the company's tax rate is 35%. What is the after-tax cost of debt?

QUESTION 11:

If the market value of debt is $156,462, market value of preferred stock is $51,970, and market value of common equity is 347,553, what is the weight of preferred stock?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 12:

The ABC Company has a cost of equity of 20.3 percent, a pre-tax cost of debt of 6.8 percent, and a tax rate of 30 percent. What is the firm's weighted average cost of capital if the proportion of debt is 26.1%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 13:

If the market value of debt is $108,464, market value of preferred stock is $91,066, and market value of common equity is 226,404, what is the weight of common equity?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 14:

ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 7 percent each year indefinitely. What is the dividend yield if the stock is selling for $35 a share?

Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 15:

ABC Inc.'s perpetual preferred stock sells for $59.9 per share, and it pays an $9.3 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 16:

The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 17:

The risk-free rate is 4.3%, the market risk premium is 6%, and the stock's beta is 1.4. What is the cost of common stock (Ke)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 18:

Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company's tax rate is 40%. What is the after-tax cost of debt?

Reference no: EM13838021

Questions Cloud

Will it take you to pay off the entire balance : 1. When you graduate you have $15,000 on your credit card which charges an APR of 14% compounded monthly. The credit card company tells you that your minimum payment is $232.90. If you make the minimum payment every month, how many months will it tak..

Assuming the system is operating on pay-as-you-go basis : Calculate the tax rate on wages necessary to pay Social Security benefits this year assuming the system is operating on a pay-as-you-go basis. calculate the tax rate necessary to pay promised benefits on a pay-as-you-go basis. What can be done to low..

Brisbane private school offers the following payment : Brisbane Private School offers the following payment options: 1. Pay $10,000 today, or 2. Make 10 monthly payments of $1,018 starting today.

Would the role of a financial manager : Would the role of a financial manager be likely to increase or decrease in importance relative to other executives if the rate of inflation increased? explain

What is the after-tax cost of debt : What is the after-tax cost of debt - What is the capital structure weight of the preferred stock?

Compute ending fifo inventory and cost of goods sold : Compute ending FIFO inventory and cost of goods sold. Assume $90,000 sales, beginning inventory 500 units @ $50, purchase of 400 units @$50; 100 units @$65; 400 units @$80

Describe the role of education in community-based : Explain the concept of primary prevention and describe the role of education in community-based, primary prevention workshops, such as Deadly Thinking.

List two benefits of using health information technology : Explain how each of the following groups uses healthcare data: providers, payers, employers, government agencies, and patients. List two benefits of using health information technology applications.

Calculate the average replacement rate : Suppose the average Social Security benefits in the nation are $14,000 per year. The number of Social Security pension recipients is currently 50 million. There are 150 million workers in the workforce this year and the average taxable wage per worke..

User Account

All Pages