What is the pre-tax cost of debt

Assignment Help Financial Management

Reference no: EM13722002

Aspen's Distributors has a cost of equity of 13.84% and an unlevered cost of capital of 12%. The company has $5,000 in debt that is selling at par value. The levered value of the firm is $12,000 and the tax rate is 34%. What is the pre-tax cost of debt?

Reference no: EM13722002

Questions Cloud

Network communications systems to computer users : The Neptune Company offers network communications systems to computer users. The company is planning a major investment expansion but is unsure of the correct measure of equity capital as it has no traded equity. Your job is to determine the basis of..

What is value of firm-debt with both a book and face value : The Montana Hills Co. has expected earnings before interest and taxes of $8,100, an unlevered cost of capital of 11%, and debt with both a book and face value of $12,000. The debt has an annual 8% coupon. The tax rate is 34%. What is the value of the..

Project plan for a new internal support system : Your company has assigned you to work on a project plan for a new internal support system. This system will be expected to track formal contacts between company software contracting teams, internal management sponsors, and their external clients.

How nature has significantly influenced your development : In your own words, define the term nature. Provide two personal examples of how nature (genes) has significantly influenced your development

What is the pre-tax cost of debt : Aspen's Distributors has a cost of equity of 13.84% and an unlevered cost of capital of 12%. The company has $5,000 in debt that is selling at par value. The levered value of the firm is $12,000 and the tax rate is 34%. What is the pre-tax cost of de..

Research reports from peer-reviewed journals : Locate research reports from peer-reviewed journals that discuss the effects of cell phone use on vision, attention, perception, or memory. In selecting at least five research reports from peer-reviewed journals relevant to the topic, make sure th..

What is the amount of the annual interest tax shield : Your firm has a $250,000 bond issue outstanding. These bonds have a 7% coupon, pay interest semi-annually, and have a current market price equal to 103% of face value. What is the amount of the annual interest tax shield given a tax rate of 35%?

Target debt-equity ratio if the targeted cost of equity : The Spartan Co. has an unlevered cost of capital of 11%, a cost of debt of 8%, and a tax rate of 35%. What is the target debt-equity ratio if the targeted cost of equity is 12%?

Leaders sources of power-motives : Write a 700- to 1,050-word paper on the interaction among leaders' sources of power, motives, and influence tactics according to the following criteria:

User Account

All Pages