What will net increase or decrease in the annual flotation

Reference no: EM13297027

New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14 percent coupon, 30-year bond issue that was issued five years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67 percent in today's market. A call premium of 14 percent would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40 percent. The new bonds would be issued when the old bonds are called. The amortization of flotation costs reduces taxes, and thus provides an annual cash flow. What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place? (a) $6,480 (b) $7,200 (c) $8,000 (d) $8,800 (e) $9,680

Reference no: EM13297027

Questions Cloud

Calculate dry unit weight-void ratio-porosity and degree : 1. A block of moist soil weighs 12.72 lbs, is 0.1050 ft3 in volume, has a water content of 9.5%, and has a specific gravity of soil solids of 2.7. Assess: Va, Vw, Vs, S, e, gama d. 2. The moist unit weight of a soil is 18.7 kN/m3 Given that Gs=2.71..

Explain what is the ratio of concentrations of caffeineh+ : The acid dissociation constant (Ka) of caffeineH+ is Ka = 0.25 M. If a cup of tea has a pH of 7.6, what should be the ratio of concentrations of caffeineH+ to unprotonated caffeine in the tea

Compute the inductive reactance of the circuit : A generator connected to an RLC circuit has an rms voltage of 120V and an rms current of 34mA. what is the inductive reactance of the circuit

Describe the environmental protection agency : When natural gas (mainly CH4) is burned with 10 percent excess air, in addition to the main gaseous products of CO2 and H2O, other gaseous products result in minor quantities. The Environmental Protection Agency (EPA) lists the following data: Emi..

What will net increase or decrease in the annual flotation : What will the net increase or decrease in the annual flotation cost tax savings be if refunding takes place? (a) $6,480 (b) $7,200 (c) $8,000 (d) $8,800 (e) $9,680

What ho form would meet your needs : You just purchased an older home with a market value of $100,000 and a replacement value of $180,000. What HO form would meet your needs? Answer a. HO-2 b. HO-6 c. HO-4 d. HO-8 e. HO-3

What is the speed of the iron block : In the figure to the left, the pulley (which is in the form of a disk) has a mass of 7.50 kg and a radius of 35 cm. What is the speed of the iron block

Explain how many grams of ether solute and thf solvent : How many grams of ether solute and THF solvent is required to make 2432 g of a 5 m solution? This is on my notes but for some reason I do not understand how the professor get the answer 2436 to this problem

What will be the earths orbital period : Show that the Earth's orbit will be a parabola (and so the Earth will escape to infinity) and If the Sun's mass suddenly doubles, what will be the Earth's orbital period?

User Account

All Pages