What is the after tax cost of debt

Assignment Help Financial Management

Reference no: EM13929672

Default risk premium on AA+ rated bonds are 3% and BBB- rated bonds are 6%. The marginal tax rate for both companies is 30%. What is the after tax cost of debt for GE and Alstom if the risk free rate (10 year US Treasury rate) is 2.5% ?

Reference no: EM13929672

Questions Cloud

What would be the nominal and effective cost of such credit : Quantitative Problem: Adams Manufacturing Inc. buys $9.6 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. Wh..

What is the maximum allowable size for memory : How many bits are needed for the opcode - how many bits are left for the address part of the instruction and what is the value stored in the AC when the program terminates?

Search literature provided for benefits of research ethics : Summarize in no more than 2 pages an Ethical code of conduct in your area of study. Find and summarize three cases of research ethics violations and their consequences in your area of study.

Pricing is critical decision made by a marketing executive : Pricing is a critical decision made by a marketing executive because price has a direct effect on a firm’s profits. Note the six major steps in the process organizations go through in setting prices on pages 322–323. Step one involves identifying pri..

What is the after tax cost of debt : Default risk premium on AA+ rated bonds are 3% and BBB- rated bonds are 6%. The marginal tax rate for both companies is 30%. What is the after tax cost of debt for GE and Alstom if the risk free rate (10 year US Treasury rate) is 2.5% ?

Cost of preferred stock and cost of common stock : Shi Importers’ balance sheet shows $300 million in debt, $50 million in preferred stock, and $650 million in total common equity, which is its target capital structure. Shi’s tax rate is 40%, cost of debt is 6%, cost of preferred stock is 5.8% and co..

Define antigens antibodies antiserum and agglutination : Define antigens, antibodies, antiserum, and agglutination. Describe the Luminol, microcrystalline, and precipitin tests for blood. Semen is determined by two tests. List them and explain each in detail. Describe the physical evidence to be collected..

Foundation of computer and mobile forensics : This module introduces the foundation of computer and mobile forensics. The students will learn about different tools and techniques in forensic computing starting from collecting the evidence, preserving the evidence towards analysing the evidenc..

Financial management practices to each of changes in market : Describe one way that a financial manager of a retail company would efficiently adjust his company’s financial management practices to each of the following changes in market conditions: (a) a big competitor enters the market; (b) technological progr..

User Account

All Pages