What is the pre-taxed cost of debt

Assignment Help Financial Accounting
Reference no: EM132495571

Question 1: Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond currently sells for 93 percent of its face value. The Company's tax rate is 35%.

a. What is the pre-taxed cost of debt?

b. What is the after tax cost of debt?

c. Which is more relevant, the pre-tax or the after- tax cost of debt? Why?

Question 2: In question 1 above, suppose the book value of the debt issues is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years to mature. The book value of this issue is $35 million and the bond sell for 57 percent of par.

a. What is the company's total book value of debt?

b. The total market value?

c. What is your best estimate of the after-tax cost of debt now?

Reference no: EM132495571

Questions Cloud

Proportion of the population : What proportion of the population are considered to be potential leaders? Round your answer to at least four decimal places.
Which one of test is conducted first or substantive test : In conducting audit for client's financial statement. Which one of this test is conducted first, substantive test or test of control? Explain your answer
Create the statement of cash flows for lah manufacturing : Prepare the statement of cash flows for 2011. LAH Manufacturing Corporation is preparing the annual financial statements for the stockholders.
Determine the points that make the feasible region : Graph the constraints, determine the points that make the feasible region and the optimal number of A and B. Show all calculations.
What is the pre-taxed cost of debt : What is the pre-taxed cost of debt? Which is more relevant, the pre-tax or the after- tax cost of debt? Why? What is the after tax cost of debt?
Studying the relationship between religious affiliation : A social researcher is interested in studying the relationship between religious affiliation and years of education. Here is the data she is working with:
What is the terminal year non-operating cash flow : What is the terminal year non-operating cash flow? Calculate the operating cash flows from years 1 to 3. Woodland Corporation purchased a printing machine
What legal restrictions would limit large marts ability : What legal restrictions would limit Large Mart's ability to make changes to their inventory cost flow assumptions, and whether or not the reason
Determine the prevalence of generalized anxiety disorder : The researcher determines that the prevalence of generalized anxiety disorder among the participants of the study is 6.1%. Calculate the z value for the test st

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare required summary journal entries complete

Prepare required summary journal entries complete with explanations for each of the 20X5, 20X6, and 20X7 fiscal years. (Round the percentage)

  Prepare a bank reconciliation as of may

All checks written by the company had been processed by the ank by May 31 and were listed on the bank statement except for checks totaling $1,890.0. Prepare a bank reconciliation as of May 31, 2011.

  Net realizable value of receivable appearing balance sheet

On January 1, 2014, the Accounts Receivable and the Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550 respectively. During the year, the company reported $70,000 of credit sales. There was $400 of receivable..

  What are the advantages and disadvantages of liabilities

What are the advantages and disadvantages of liabilities? What are examples of each, and how would record the transactions in accounting?

  The portfolio of trading securities

The portfolio of trading securities had a cost of $200,032 and a fair value of $188,000, requiring a credit balance in Valuation Allowance for Trading Investments of $12,032 ($200,032 - $188,000). Thus, the debit balance from December 31, 2016, is to..

  Analyze all transactions on swartzs records

Identify and analyze all transactions on Swartz's records to account for its investments during 2010.

  Company report as office supplies expense for the year

A company had no office supplies available at the beginning of the year. During the year, the company purchased $360 worth of office supplies. On December 31, $120 worth of office supplies remained. How much should the company report as office suppli..

  Affecting client business risk and acceptable audit risk

What are the major factors affecting client business risk and acceptable audit risk for this audit? What is the most appropriate document(s) to use for sampling procedures? What are some attributes that you would list on your work paper when doing yo..

  How would you best describe sunset boards cash flows

How would you best describe Sunset Boards' cash flows for 2014? Write a brief discussion. In light of your discussion in the previous question, what do you think about Tad's expansion plans?

  Preble company manufactures one product

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit

  How the concept of value added is important to folkestone

BTEC HNC/D MANAGEMENT COST ACCOUNTING COSTING BUDGETING LEVEL 4- Business Finance-Write an informal note which indicates the degree of success .

  Calculate the closing inventory in trade

From the following figures calculate the closing inventory-in-trade that would be shown using FIFO, LIFO, AVCO methods.

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