Yield to maturity on similarly outstanding debt for firm

Assignment Help Financial Management
Reference no: EM131620275

Keyspan corp. is planning to issue debt that will mature in 2,030. In many respects, the issue is similar to the currently outstanding debt of the corporation. Use Table 11-3.

a. Calculate the yield to maturity on similarly outstanding debt for the firm, in terms of maturity. (Input your answer as a percent rounded to 2 decimal places.)

Assume that because the new debt wil be issued at par, the required yield to maturity will be .12 percent higher than the value determined in part a.

b. What is the new yield to maturity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

c. If the firm is in a 40 percent tax bracket, what is the aftertax cost of debt for the yield determined in part b? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Reference no: EM131620275

Questions Cloud

What is the weighted average life of the mortgage pool : If the entire mortgage pool is repaid at the end of the second month, what is the weighted average life of the mortgage pool?
Annual coupon payments promised to each tranche : What are the annual coupon payments promised to each tranche?
What is the company cost of equity and cost of debt : What is the company’s cost of debt? What is the company’s cost of equity? What is the company’s weighted average cost of capital?
What is the present value of the mortgage pass : What is the present value of the mortgage pass-through if the entire pool is repaid after two months and there is no change in interest rates?
Yield to maturity on similarly outstanding debt for firm : Calculate the yield to maturity on similarly outstanding debt for the firm, in terms of maturity.
Buy piece of equipment-what is the internal rate of return : You buy a new piece of equipment for $14,761, and you receive a cash inflow of $2,300 per year for 10 years. What is the internal rate of return?
The greek crisis-a tragedy or opportunity : The Greek Crisis: A Tragedy or Opportunity?
Estimate your total insurance needs using dink method : You and your spouse are in good health and have reasonably secure careers. Estimate your total insurance needs using the DINK method.
Calculate the real rate of return : Calculate the real rate of return. What is my purchasing power?

Reviews

Write a Review

Financial Management Questions & Answers

  What is its cost of common equity and wacc

What is its cost of common equity and its WACC?

  What was average nominal risk premium on crash-n-burn stock

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 4 percent, -12 percent, 26 percent, 16 percent, and 16 percent. The average inflation rate over this period was 3.6 percent and the average T-bill rate w..

  What is maximum cost the company would be willing to pay

Hankins, Inc., is considering a project that will result in initial aftertax cash savings of $6.5 million at the end of the first year, and these savings will grow at a rate of 3 percent per year indefinitely. What is the maximum cost the company wou..

  What is the amount to use as the annual sales

Winnebagel Corp. currently sells 16,800 motor homes per year at $25,200 each, and 6,720 luxury motor coaches per year at $47,600 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 10,640 of these..

  What is the present value of the tuition payments

Your oldest daughter is about to start kindergarten at a private school. Tuition is $10,000 per year, payable at the beginning of the school year. You expect to keep your daughter in private school through high school. What is the present value of th..

  Discuss four assumptions of the capital asset pricing model

Discuss four assumptions of the Capital Asset Pricing Model (CA PM) and explain how they do not agree with "real world" observations. Explain the concept of " regression to the mean " as it relates to the adjusted beta.

  Defined benefit pension plan-find self financing portfolio

You are the manager of defined benefit pension plan of university of XYZ. find a self financing portfolio of 5 year treasury notes with duration of 4 years.

  Included in the project analysis for net working capital

The Card Shoppe needs to maintain 20 percent of its sales in net working capital. Currently, the shoppe is considering a 6-year project that will increase sales from its current level of $379,000 to $421,000 the first year and to $465,000 a year for ..

  What is the beta of your stock portfolio

ou expect to receive a $1.00 dividend the next time your stock pays dividends. If your required rate of return (RRR) on the “dog” is 20% and the growth rate is 2%, what should this stock sell for?  You have $80,000 to invest in stocks. You select 2 s..

  After-tax earnings available under the corporate forms

Assume the pre-tax profit of $50,000 has been earned by a business, and the owner/proprietor wants to withdraw all of the after-tax profit for personal use.  Assume the tax rate for a C corporation is 34%, while the rate for a person is 27%.  The aft..

  Graph the value of a call option

Graph the value of a call option (vertical axis) against a, the instantaneous standard deviation of the returns on  the underlying asset;- What are the conditions under which an American put would be exercised early on a stock that pays no dividends?

  What is pyramid structure of ownership

What is a pyramid structure of ownership? Why do common shareholders continue to invest in pyramid structure companies?

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