What would aftertax cost of debt be

Assignment Help Financial Management
Reference no: EM131587980

The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 12 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 10 percent higher; that is, firms that paid 14 percent for debt last year will be paying 15.40 percent this year. a. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year and the 10 percent increase? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) b. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 25 percent because of involvement in political activities), what would the aftertax cost of debt be? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Reference no: EM131587980

Questions Cloud

Firm invests in companies for non-financial reasons : What type of firm invests in companies for non-financial reasons?
What are its degree of operating leverage-financial leverage : what are its degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL)?
Effective annual interest rate of the loan in mexican pesos : which loan has the lower effective annual interest? rate? The effective annual interest rate of the loan in Mexican pesos is: ?
How many shares are issued to new investor : What are the total post-investment shares? How many shares are issued to new investor? How did you determine this?
What would aftertax cost of debt be : what would the aftertax cost of debt be, based on their cost last year and the 10 percent increase?
Compute the current price of the bonds : Compute the current price of the bonds if the present yield to maturity is.
Price-earnings ratio-what is ratio after it borrows : What is the ratio of price to expected earnings for River Cruises before it borrows the $230,000?
What is sarah realized gain : If the stock of Super Brand is trading at $60.61 at expiration, what is Sarah’s realized gain?
Determine the npv for project-draw a timeline : Determine the NPV for this project. Should Brower build the plant? DRAW A TIMELINE

Reviews

Write a Review

Financial Management Questions & Answers

  What is the maturity risk premium

The real risk-free rate is 3 percent, and inflation is expected to be 3 percent for the next 2 years. A 2-year Treasury security yields 6.3 percent. What is the maturity risk premium for the 2-year security?

  Assumes that inflation rate is running

You deposit a sum of $10,000 today in your bank safe deposit box and leave it there. You learn nothing in your bank account as the money is sitting inside the safe deposit box. Assumes that inflation rate is running at 14% a year. How much will your ..

  As general rule-the optimal capital structure

As general rule, the optimal capital structure

  Prepare a pro forma forecast for the next fiscal year

Prepare a pro forma forecast for the next fiscal year for T-Mobile US Inc. A projected income statement and balance sheet for the next fiscal year. How is a pro forma forecast completed?

  What factors do courts use in determining excessive fees

What is the unique procedure available to fund shareholders for challenging a fund adviser’s management fees as excessive? What factors do courts use in determining excessive fees?

  Compute the percentage of earnings retained

Compute the Percentage of earnings retained,  Price/earnings ratio,  Dividend payout, Dividend yield and Book value per share for 2011, 2010, and 2009:

  Angry shareholders has placed corporate resolution

A group of angry shareholders has placed a corporate resolution before all shareholders at a company’s annual stockholders’ meeting. The resolution demands that the company stretch its accounts payable because these shareholders have determined that ..

  What effect will this have on dollar and pound

Other things being equal, what effect will this have on dollar and pound?

  Applying for a cashback credit card

A person with a FICO credit score of 790 is applying for a cashback credit card.

  What is the value of the investment to you today

If the appropriate annual discount rate is 8.00%, what is the value of the investment to you today?

  About the monthly discount rate

You need a new car and the dealer has offered you a price of $20,000, with the following payment options: (a) pay cash and receive a $2000 rebate, or (b) pay a $5000 down payment and finance the rest with a 0% APR loan over 30 months. But having just..

  What is the projects operating cash flow

eans ‘n More currently sells blue jeans and T-shirts. Management is considering adding fleece tops to their inventory to provide a cooler weather option. The tops would sell for $39 each and they expect to sell 6,000 per year. By adding the fleece to..

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