What is the pretax cost of debt

Assignment Help Finance Basics
Reference no: EM133253206

Marysa Corp. issued a 18-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 92 percent of its face value. The company's tax rate is 22 percent. 

a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places)

b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places) 

  1. Pretax cost of debt = ____ %
  2. Aftertax cost of debt= ____ %

Reference no: EM133253206

Questions Cloud

Time value of money when planning for retirement : How should one consider the time value of money when planning for retirement? Please share examples within your response.
What would be the price of the option : A put option on a stock with three months to maturity has the exercise price of $60. The stock is currently traded at $59 per share and a volatility of 30% per
What should be the contractual forward price : A one-year forward contract on a non-dividend-paying stock is entered into when the stock price is $49.83, the risk-free rate of interest is 2.1% per annum with
Draw a timeline graph for the bond : Suppose that Ford issued a coupon bond at a price of $1,100 on January 1, 2019. The coupon bond has the following characteristics:
What is the pretax cost of debt : Marysa Corp. issued a 18-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 92 percent of its face value. The company's tax rate is 22 pe
Transport packages of cement : In an industrial application in which a conveyor belt with dimensions of 5m long by 2m wide, must transport packages of cement. The plant is known to be located
Estimate the wacc for unitron : Unitron Corporation has book equity equal to 100 and book debt equal to 100, with an implied book leverage (debt/assets) ratio of one-half. The ratio of market-
Calculate percentage of company gross profit margins : 1. Calculate the percentage of the company's gross profit margins (show calculations and brief explanation).
What is the npv of the project : The capital budgeting committee of Pegasus Corporation is contemplating a new investment. Given the project's characteristics, the cost of capital is estimated

Reviews

Write a Review

Finance Basics Questions & Answers

  What does the capm predict about the expected return

Beta and CAPM. Is it possible that a risky asset could have a beta of zero? Explain. Based on the CAPM, what is the expected return on such an asset?

  Which type of invasion of privacy

Sally goes through Edith's purse when Edith leaves the room. Edith returns and catches her in the act. Edith can sue for which type of invasion of privacy?

  Are events a and b mutually exclusive what is the

let a be an event that a persons primary method of transportation to and from work is an automobile and b be an event

  Should the hospital agree to the discount proposal

A profit of $500,000? d.Assume tha 20 percent of hospital's inpatient days come from a managed care plan that wants a 25 percent discount from charges.should the hospital agree to the discount proposal?

  What is the effective interest rate

But the bank is compounding semiannually. What is the effective interest rate that Rahul would pay for the loan?

  List the major responsibilities of the board of governors

List the major responsibilities of each of the following:-  the Board of Governors -  the 12 Reserve Banks-  the Federal Open Market Committee

  Calculate the decision on the irr

Company XYZ is considering investing in a new machine that will cost $15,000. The machine will allow the firm to generate sales of $50,000 per year.

  What is the risk of a portfolio

What is the risk of a portfolio with the following characteristics: The standard deviation of the market index is 25 per cent. The weight of the risk free rate

  A risky 400000 investment is expected to generate the

a risky 400000 investment is expected to generate the following cash flows year 1 2 3 4 145300 175445 156788 145000 a.

  Inflation rate change

Prior to the inflation rate change, how many bonds must your company sell to raise the required capital? (rounded to nearest whole integer)

  Discuss when each of the following types of businesses

Discuss when each of the following types of businesses is likely to recognize revenues and expenses. A bank lends money for home mortgages. A travel agency books hotels, transportation, and similar services for customers and earns a commission from t..

  What is the firm''s disbursement float

The firm also receives checks in the amount of $12,000 daily but loses four days while they are being deposited and cleared. What is the firm's disbursement float, collections float, and net float?

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