Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond three years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 22 percent. |
a. |
What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
b. | What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
c. |
Which is more relevant (a) or (b), the pretax or the aftertax cost of debt? |
(a). Aftertax cost of debt (b). Pretax cost of debt |
Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond three years ago. The bond currently...
Jiminy’s Cricket Farm issued a 20-year, 4 percent semiannual coupon bond 6 years ago. The bond currently sells for 95 percent of its face value. The company’s tax rate is 25 percent. a. What is the company’s pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company’s aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a...
Jiminy’s Cricket Farm issued a bond with 20 years to maturity, semiannual coupons, and a stated annual coupon rate of 8 percent 3 years ago. The bond currently sells for 96 percent of its face value. The company’s tax rate is 35 percent. a. What is the pretax cost of debt (calculated as the stated annual YTM)? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Pretax cost of debt %...
Jiminy’s Cricket Farm issued a bond with 10 years to maturity, semiannual coupons, and a stated annual coupon rate of 6 percent 2 years ago. The bond currently sells for 95 percent of its face value. The company’s tax rate is 35 percent. a. What is the pretax cost of debt (calculated as the stated annual YTM)? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the aftertax...
Jiminy's Cricket Farm issued a 30-year, 6.3 percent semiannual bond eight years ago. The bond currently sells for 110 percent of its face value. The company's tax rate is 22 percent. a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal...
Jiminy’s Cricket Farm issued a 30-year, 7 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. The company’s tax rate is 22 percent. What is the pretax cost of debt? What is the aftertax cost of debt? Which is more relevant, the pretax or the aftertax cost of debt? Why?
Jiminy's Cricket Farm issued a 30-year, 5 percent semiannual coupon bond 3 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 22 percent. a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a...
Chec Jiminy's Cricket Farm issued a 16-year, 6 percent semiannual coupon bond 2 years ago. The bond currently sells for 91 percent of its face value. The company's tax rate is 38 percent. a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's aftertax cost of debt? (Do not round intermediate calculations and enter your answer as...
Jiminy's Cricket Farm issued a 15-year, 5 percent semiannual coupon bond 3 years ago. The bond currently sells for 92 percent of its face value. The company's tax rate is 22 percent a. What is the company's pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the company's aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a...
Jiminy's Cricket Farm issued a 30-year, 6 percent s annual bond currently sells for 93 percent of its face value. T 22 percent. inree years ago. The o mpany's tax rate is a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded...
Jiminy’s Cricket Farm issued a 15-year, 4 percent semiannual coupon bond 2 years ago. The bond currently sells for 91 percent of its face value. The company’s tax rate is 21 percent. The book value of the debt issue is $30 million. In addition, the company has a second debt issue, a zero coupon bond with 7 years left to maturity; the book value of this issue is $20 million, and the bonds sell for 73 percent of par. a....