What is the present value of the tax shield

Assignment Help Financial Management
Reference no: EM13808013

Carter's Home Supply has a $35 million bond issue outstanding with a coupon rate of 8.5 percent. The tax rate is 38 percent. What is the present value of the tax shield?

Reference no: EM13808013

Questions Cloud

Using CAPM compute the cost of equity financing : ABC is a manufacturer. Long term debt, with an incremental borrowing rate of 6% Capital stock with the following information. Risk free rate 4%, market rate of return 12%, Beta 1.25. Compute the weighted average cost of capital (WACC)? Using CAPM com..
Compounded quarterly-required rate of return : BSW Corporation has a bond issue outstanding with an annual coupon rate of 8 percent paid quarterly and four years remaining until maturity. The par value of the bond is $1,000. Determine the fair present value of the bond if market conditions justif..
New return on equity : The common stock and debt of Northern Sludge are valued at $60 million and $40 million, respectively. Investors currently require a 17.0% return on the common stock and a 7.0% return on the debt.
Existing shareholders as a fraction of the funds raised : The market value of the marketing research firm Fax Facts is $450 million. The firm issues an additional $150 million of stock, but as a result the stock price falls by 2%. What is the cost of the price drop to existing shareholders as a fraction of ..
What is the present value of the tax shield : Carter's Home Supply has a $35 million bond issue outstanding with a coupon rate of 8.5 percent. The tax rate is 38 percent. What is the present value of the tax shield?
What is the beta of your portfolio-shares of stock : You own 500 shares of Stock A at a price of $60 per share, 405 shares of Stock B at $80 per share, and 500 shares of Stock C at $41 per share. The betas for the stocks are .8, 1.8, and .7, respectively. What is the beta of your portfolio?
What must the expected return on this stock be : A stock has a beta of .95, the expected return on the market is 21 percent, and the risk-free rate is 4.00 percent. What must the expected return on this stock be?
What is the market risk premium : Asset W has an expected return of 16.0 percent and a beta of 1.45. If the risk-free rate is 3.2 percent, what is the market risk premium?
What would the risk-free rate have to be for the two stocks : Stock Y has a beta of .98 and an expected return of 10.30 percent. Stock Z has a beta of .80 and an expected return of 9 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other?

Reviews

Write a Review

Financial Management Questions & Answers

  How government or market itself to solve problem

Write about the cause and the effect which until today. Also, write about how the government or the market itself to solve the problem.

  The total annual inventorycost for this quantity

What is the total annual inventory/ordering cost for this quantity? A company balance sheet shows which of the following? a. A dominant seller sets prices b. A company financial position over a period of time, say, the calendar year 2013 c. A com..

  Bond yields and rates of return

A 25-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,100. The bond sells for $950. What is the bond's yield to maturity? What is the bond's current yield? What is the bond's yield to call?

  What are bond ratings and how do they impact bond valuation

What are bond ratings and How do they impact bond valuation - who are the bond ratings agencies and what do the ratings mean? When ratings fall what happens to the valuation of a bond and why?

  What are the firms interest tax savings

(Computing interest tax savings) Dharma Supply has earnings before interest and taxes (EBIT) of $544000, interest expenses of $274000, and face a corporate tax rate of 34 percent.

  What was the return of the stock market that day

Stock Index Performance On November 27, 2007, The Dow Jones Industrial Average closed at 13,038.44, which was up 255.04 that day. What was the return (in percent) of the stock market that day?

  Motivation-communication-teams-groups and team work

How could you use expectancy theory to increase your own motivational level? What kind of facial expression do you think might make a person appear intelligent? In what way is being a member of a virtual team much like being a telecommuter?

  What are expected return and risk of the portfolio delta

The portfolio Alpha has an expected return of 18.50% and risk of 60%. The portfolio Gamma has an expected return of 11.75% and risk of 30%. The risk of market portfolio is 40%. Assume that the Capital Asset Pricing Model holds, what are the expected ..

  What are the yields to maturity for bond

Consider three risk free Eurobonds (which pay coupons annually). Their times to maturity, coupon rates and current market prices (based on a face value of$100) are as follows: Bond A 1 yr 9% $101.25; Bond B 2 yrs 8% 99.75; Bond C 3 yrs 7% $96.00.

  Cash flow of firm also referred to as cash flow from assets

The cash flow of a firm, also referred to as cash flow from assets, must be equal to the cash flow to:

  Begin by constructing a time line

A project has an initial cost of $56,800, expected net cash inflows of $15,000 per year for 9 years, and a cost of capital of 13%. What is the project's NPV?

  Discuss how the organization can capitalize on the

bull write a brief company history including a mission statement if available.section iibull thoroughly explain at

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd