What is the firm after-tax component cost of debt

Assignment Help Financial Management

Reference no: EM131839705

A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $648.31. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? Round your answer to two decimal places. (Hint: Base your answer on the nominal rate.)

Reference no: EM131839705

Questions Cloud

Compute the expected rate of return : You have purchased residential dwelling for $100,000 that you plan to flip in one year. Compute the Expected Rate of Return.

Firm is planning to invest in an automated packaging plant : Your firm is planning to invest in an automated packaging plant. Harburtin Industries is an? all-equity firm that specializes in this business.

Define the integrated approach to develop net cash flows : Define the integrated approach to develop net cash flows for feasible project alternatives, detailing components and identify their benefits in using techniques

What happens to the expected return on the stock : If Northern Sludge issues an additional $11 million of common stock and uses this money to retire debt, what happens to the expected return on the stock?

What is the firm after-tax component cost of debt : What is the firm's after-tax component cost of debt for purposes of calculating the WACC?

Value of the dollar with respect to foreign currencies : What will this do to the value of the dollar with respect to foreign currencies?

Financial statement analysis : Financial statement analysis is. A fundamental problem in finance is that of a principal agent relationship.

First withdrawal is at end of your first retirement year : Assume that you have 40 years until retirement and have just started your first job. assume that your first withdrawal is at end of your first retirement year.

What is the highest expected return these bonds : Ralston Purina had? AA-rated, 10-year bonds outstanding with a yield to maturity of 1.77%. What is the highest expected return these bonds could? have?

User Account

All Pages