Homework Answers
please provide rating..
| We have to use financial calculator to sovle this problem | ||||||||
| Please put in financial calculator as below - | ||||||||
| FV | 1000 | |||||||
| PV | -935 | |||||||
| PMT =1000*11% | 110 | |||||||
| N | 12 | |||||||
| Compute I | 12.05% | |||||||
| Tax rate = | 40% | |||||||
| Therefore after tax cost of bond = 12.05%*(1-40%) | 7.23% | |||||||
Add Answer to:
13. (Cost of Debt) The Zephyr Corporation is contemplating a new investment to be financed with...
The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The...
The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm could sell new $1,000 par value bonds at a net price of $945. The coupon interest rate is 16 percent, and the bonds would mature in 14 years. If the company is in a 35 percent tax bracket, what is the after-tax cost of capital to Zephyr for bonds?
3. The Dayton Corporation is considering a new investment, which would be financed from debt. Dayton...
3. The Dayton Corporation is considering a new investment, which would be financed from debt. Dayton could sell new S1k par value bonds at a new price of $950. The bonds would mature in 15 years, and the coupon interest rate is 10%Compute the after-tax cost of capital to Dayton for bonds, assuming a 34% tax rate. Show work
5. A firm is issuing new debt to finance a capital investment project. The firm will...
5. A firm is issuing new debt to finance a capital investment project. The firm will issue 15,550 new bonds with a $1,000 face value that will mature in 10 years. The bonds will pay a $35 semiannual coupon, and similar bonds are currently priced at 95% of par. The associated flotation costs are expected to be $15 per bond. Further, the company has a marginal tax rate of 34%. Given this information, what is the before-tax cost of debt?...
Mason Manufacturing is contemplating offering a new $60 million bond issue to replace an outstanding $60...
Mason Manufacturing is contemplating offering a new $60 million bond issue to replace an outstanding $60 million bond issue. The firm wishes to do this to take advantage of the decline in interest rates that has occurred since the initial bond issuance. The old and new bonds are described below. The firm is in the 30 per cent tax bracket. Old bonds. The outstanding bonds have a $1,000 par value and a 7.5 per cent coupon interest rate. They were...
The cost of debt that is relevant when companies are evaluating new investment projects is the marginal cost of the new...
The cost of debt that is relevant when companies are evaluating new investment projects is the marginal cost of the new debt to be raised to finance the new project. Consider the case of Purple Lemon Fruit Company (Purple Lemon): Purple Lemon Fruit Company is considering issuing a new 15-year debt issue that would pay an annual coupon payment of $75. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for...
(Individual or component costs of capital) Your firm is considering a new investment proposal and would...
(Individual or component costs of capital) Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following: a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 12.1 percent that is paid semiannually. The bond is currently selling for a price of $1,123 and will mature in 10...
The cost of debt that is relevant when companies are evaluating new investment projects is the...
The cost of debt that is relevant when companies are evaluating new investment projects is the marginal cost of the new debt to be raised to finance the new project. Consider the case of Peaceful Book Binding Company: Peaceful Book Binding Company is considering issuing a new 20-year debt issue that would pay an annual coupon payment of $80. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for a price...
The cost of debt Gronseth Drywall Systems, Inc., is in discussions with its investment bankers regarding...
The cost of debt Gronseth Drywall Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the firm that different maturities will carry different coupon rates and sell at different prices. The firm must choose among several alternatives. In each case, the bonds will have a $1,000 par value and flotation costs will be $40 per bond. The company is taxed at 40%. Use the approximation formula to calculate the...
cdiate the ter-tax cost of overlapping nteest tax bracket. ompany, an American company, is contemplating offering a new $50 million bond is standing $50 million bond issue. The company wishes to...
cdiate the ter-tax cost of overlapping nteest tax bracket. ompany, an American company, is contemplating offering a new $50 million bond is standing $50 million bond issue. The company wishes to take advantage of the to replace an out decline in interest rates that has occurred since the initial bond issuance. are described in what follows. The company is in the 40% tax bracket. old bonds. The outstanding bonds have a $1,000 face value and a 9% coupon interest rate....
(Individual or component costs of capital) Your firm is considering a new investment proposal and would...
(Individual or component costs of capital) Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following: a. A bond that has a $1.000 par value (face value) and a contract or coupon interest rate of 12.4 percent that is paid semiannually. The bond is currently selling for a price of $1,125 and will mature in 10...
3. The Dayton Corporation is considering a new investment, which would be financed from debt. Dayton could sell new S1k par value bonds at a new price of $950. The bonds would mature in 15 years, and the coupon interest rate is 10%Compute the after-tax cost of capital to Dayton for bonds, assuming a 34% tax rate. Show work
(Individual or component costs of capital) Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following: a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 12.1 percent that is paid semiannually. The bond is currently selling for a price of $1,123 and will mature in 10...
The cost of debt that is relevant when companies are evaluating new investment projects is the marginal cost of the new debt to be raised to finance the new project. Consider the case of Peaceful Book Binding Company: Peaceful Book Binding Company is considering issuing a new 20-year debt issue that would pay an annual coupon payment of $80. Each bond in the issue would carry a $1,000 par value and would be expected to be sold for a price...
The cost of debt Gronseth Drywall Systems, Inc., is in discussions with its investment bankers regarding the issuance of new bonds. The investment banker has informed the firm that different maturities will carry different coupon rates and sell at different prices. The firm must choose among several alternatives. In each case, the bonds will have a $1,000 par value and flotation costs will be $40 per bond. The company is taxed at 40%. Use the approximation formula to calculate the...
cdiate the ter-tax cost of overlapping nteest tax bracket. ompany, an American company, is contemplating offering a new $50 million bond is standing $50 million bond issue. The company wishes to take advantage of the to replace an out decline in interest rates that has occurred since the initial bond issuance. are described in what follows. The company is in the 40% tax bracket. old bonds. The outstanding bonds have a $1,000 face value and a 9% coupon interest rate....
(Individual or component costs of capital) Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the firm for the following: a. A bond that has a $1.000 par value (face value) and a contract or coupon interest rate of 12.4 percent that is paid semiannually. The bond is currently selling for a price of $1,125 and will mature in 10...
Most questions answered within 3 hours.
-
A 1.2 kg mass in placed on the end of a 1.4 m string. One end...
asked 11 seconds ago -
A researcher wishes to estimate the proportion of adults who
have high-speed Internet access. What size...
asked 9 minutes ago -
Let X be uniformly distributed in the unit interval [0,2].
Consider the random variable Y=g(x), where...
asked 12 minutes ago -
1) ls it true that relationships are important in late
adulthood?
2) what sort of relationships...
asked 32 minutes ago -
The figure shows a section of insulating rod of radius R_1=2.3mm
and length L=11m inside a...
asked 33 minutes ago -
You would like to buy a house that costs $350,000. You have
$50,000 in cash that...
asked 36 minutes ago -
In response to high inflation in the United States, let us
assume that the Federal Reserve...
asked 2 hours ago -
Which of the following is not an example of the public
health sector's responsibility?
a.immunization of...
asked 2 hours ago -
Search the Internet to find (at least 2 websites) related to the
general field of malware...
asked 4 hours ago -
A solution of methanoic acid, HCOOH (Ka = 1.8 ×
10-4) has pH 2.69. What amount...
asked 4 hours ago -
Nike Becomes a Global Citizen
Craig E. Johnson
In 1962, Stanford University student Phil Knight came...
asked 5 hours ago -
You have $35,000 to invest in a stock portfolio. Your choices
are Stock X with an...
asked 6 hours ago