What is your best estimate of aftertax cost of debt

Assignment Help Financial Management

Reference no: EM132047191

Shanken Corp. issued a 30-year, 6 percent semiannual bond 4 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $45 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 15 years left to maturity; the book value of this issue is $50 million and the bonds sell for 54 percent of par. The company’s tax rate is 40 percent.

What is the company's total book value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Total book value $

What is the company's total market value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Total market value $

What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Cost of debt %

Reference no: EM132047191

Questions Cloud

Net present value of loan excluding flotation costs : Calculate the net present value of the loan excluding flotation costs.

What is the true initial cost figure the company : What is the true initial cost figure the company should use when evaluating its project?

Stock returns have covariance with the market portfolio : Neon Corporation’s stock returns have a covariance with the market portfolio of .0345. Calculate the NPV of the project.

Endeavor to pursue strategies to be socially responsible : Explain why a company would endeavor to pursue strategies to be socially responsible in its actions

What is your best estimate of aftertax cost of debt : What is the company's total book value of debt? What is your best estimate of the aftertax cost of debt?

Project available that requires initial investment : Dorman Industries has a new project available that requires an initial investment of $4.7 million. What is the NPV of this project?

What is the npv of decision to purchase new machine : What is the NPV of the decision to purchase a new machine? What is the IRR of the decision to purchase a new machine?

Compute the price of common stock : China America Manufacturing has a beta of 1.50, the risk-free rate of interest is currently 12 percent, Compute the price of common stock.

Cash flow analysis is setting the bid price on project : Another utilization of cash flow analysis is setting the bid price on a project. what bid price per carton should you submit?

User Account

All Pages