What is the pre-tax cost of this debt

Assignment Help Financial Management

Reference no: EM13927926

Perpetual Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Perpetual must make interest payments into the infinite future. If the bondholders receive annual payments of $72 and the current price of the bonds is $1,100. What is the pre-tax cost of this debt?

Reference no: EM13927926

Questions Cloud

Assume the person has no other medical expenses : A health insurance policy pays 85 percent of physical therapy costs after a $200 deductible. In contrast, an HMO charges $20 per visit for physical therapy. How much would a person save with the HMO if he or she had 10 physical therapy sessions costi..

What is the current cost of common equity for the firm : Underestimated Inc.’s common shares currently sell for $36 each. The firm’s management believes that its shares should really sell for $57 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase ..

Job with an unusual bonus structure : You have been offered a job with an unusual bonus structure. As long as you stay with the firm, you will get extra 70, 000 every seven years, starting seven years from now. What is the present value of this incentive if you plan to work for the compa..

Common stock pays an annual dividend per share : A common stock pays an annual dividend per share of $5.25. The risk-free rate is 9% and the risk premium for this stock is 6%. If the annual dividend is expected to remain at $5.25, what is the value of the stock?

What is the pre-tax cost of this debt : Perpetual Ltd. has issued bonds that never require the principal amount to be repaid to investors. Correspondingly, Perpetual must make interest payments into the infinite future. If the bondholders receive annual payments of $72 and the current pric..

What is total amount of dividends declared and paid : The stockholder's equity accounts of a corporation on January 1, 2015, were as follows: As of Dec.31, 2015, what is the average selling price of the preferred stock? How many shares of common stock are outstanding as of December 31, 2015? What is tot..

What is the amount of the last dividend paid : Roy's Welding common stock sells for $48.96 a share and pays an annual dividend that increases by 2.5 percent annually. The market rate of return on this stock is 14.6 percent. What is the amount of the last dividend paid?

Considered a hybrid organizational form : Which of the following is considered a hybrid organizational form?

When the required rate of return on a bond equals : When the required rate of return on a bond equals its coupon rate, the bond will sell at its par value. When interest rates rise, bond prices on outstanding issues fall. When interest rates fall, bond prices on outstanding issues rise.

User Account

All Pages