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The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 5 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 7 percent for debt last year will be paying 7.70 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 20 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.)
A bond has 6 years to maturity, a coupon rate of 14.1%?, and a face value of$1,000.The yield to maturity is7.2%. Assume annual compounding. What is the current price of the bond, the coupon yield, and the capital gain? yield? what is the percentage i..
What is the duration of a four-year Treasury bond with a 6 percent semiannual coupon selling at par? What is the duration of a three-year Treasury bond with a 6 percent semiannual coupon selling at par?
What is the return to the bank on these loans?
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A Treasury bond that settles on August 10, 2013, matures on February 23, 2021. The coupon rate is 7.00 percent and the quoted price is 117:15. What is the bond’s yield to maturity?
Haskell Corp. is comparing two different capital structures. Plan I would result in 12,000 shares of stock and $100,000 in debt. Plan II would result in 8,700 shares of stock and $155,000 in debt. Assuming that the corporate tax rate is 40 percent, w..
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Construct the amortization schedule for the first two months only, and find the amount of principal paid back in the second month.
The Bradley Corporation produces a product with the following costs as of July 1, 2014: Material $ 4 per unit Labor 4 per unit Overhead 2 per unit Beginning inventory at these costs on July 1 was 4,250 units. What is the value of ending inventory?
Jones Corp’s outstanding bonds, which have a face value of $1,000, have 10 years remaining to maturity. The bonds’ coupon rate is 6%, and interest is paid semiannually. If investors require a rate of return equal to 5% to invest in similar-risk bonds..
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