What will be the firm after-tax cost of debt on the bond

Assignment Help Financial Management

Reference no: EM131910790

(Cost of debt) LLC International is issuing a $2,000 par value bond that pays 8 percent annual interest and matures in 10 years. Investors are willing to pay $1,800 for the bond. Floatation costs will be 4 percent of market value. The Company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

Reference no: EM131910790

Questions Cloud

Recognize similarities and differences between organizations : The CEO of your organization has asked you to write what you have learned so far so he can convince the Governing Board that you are more than worthy.

What is the effective interest rate on loan : Gorman Jewels borrows $270,000 at a 4.0 percent stated APR. What is the effective interest rate on the loan?

What are the savings from using the lockbox : If the firm’s opportunity cost on savings is 4.90 percent, what are the savings from using the lockbox?

Write paper on algorithms and application uses of hashing : Write 2 page paper APA formatted double spaced with references on purpose, algorithms and application uses of hashing.

What will be the firm after-tax cost of debt on the bond : The Company is in a 20 percent tax bracket. What will be the firm's after-tax cost of debt on the bond?

Benefits mentioned was employee stock options : During your interview process, one of the benefits mentioned was employee stock options.

In what ways do you think you have progressed in your group : In what ways do you think you have progressed in your small group (i.e. meetings) communication abilities? What do you want to keep working on?

What was the biggest take-away or lesson learned : What surprised you? What was the biggest take-away or lesson learned? How did the conversation change your views of entrepreneurship?

What are the savings from lockbox : Assuming the company can earn 7.5 percent interest per year, what are the savings from the lockbox?

User Account

All Pages