What is the firm cost of debt financing

Assignment Help Operation Management

Reference no: EM131117535

St. Thomas Company is planning to issue $1,000 par value bonds. The bonds will have a coupon rate of 9.5 percent and will be sold at a market price of $980. Flotation costs will amount to 4 percent of market value. The bonds will mature in 15 years and coupon payments will be semi-annual. St. Thomas' marginal tax rate is 35%. What is the firm's cost of debt financing?

Reference no: EM131117535

Questions Cloud

Case study on jaycie children clothing : Jaycie's Children's Clothing is a retailer that sells high-end clothes for toddlers (ages 1-3) primarily in shopping malls. Jaycie's also has a successful Internet-based sales division. Recently Dave Walker, vice-president of the e-commerce divisi..

Evaluating proposed acquisition of new production machine : Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's base price is $200,000, and installation costs would amount to $28,000. Also, $10,000 in net working capital would be required at installation.

A topic related to health information technology : 1. Use the "literature review matrix template" (attached) to document the research studies you have found. The filled template with 10 articles you are going to support the essay. This is due on the 7/5/2016

Compute cost of goods sold based on d : Compute a cost-to-retail percentage (round to two decimals) under the following conditions.

What is the firm cost of debt financing : St. Thomas Company is planning to issue $1,000 par value bonds. The bonds will have a coupon rate of 9.5 percent and will be sold at a market price of $980. Flotation costs will amount to 4 percent of market value. The bonds will mature in 15 years a..

What profit margin must the firm achieve : Dante Co. wishes to maintain a growth rate of 11.6 percent a year, a debt–equity ratio of 1.6, and a dividend payout ratio of 25 percent. The ratio of total assets to sales is constant at .88. What profit margin must the firm achieve?

Write a program that reads a file : Write a program that reads a file consisting of students test scores in the range 0-200.

Numbers of older americans due to improved treatments : Topic that Americans are generally living longer, and there are increasing numbers of older Americans due to improved treatments, new technologies, and the health care reform law. What do you believe will be the challenges of U.S. health care in t..

Increasing numbers of older americans : Topic that Americans are generally living longer, and there are increasing numbers of older Americans due to improved treatments, new technologies, and the health care reform law.

User Account

All Pages