Jiminy's Cricket Farm just issued a 20-year, 7 percent, semiannual bond. The bond currently sells for...
Jiminy's Cricket Farm just issued a 20-year, 7 percent, semiannual bond. The bond currently sells for 108 percent of its face value. What is the company’s pretax cost of debt? What is the company’s aftertax cost of debt if the tax rate is 23 percent?
Pretax cost of debt 6.29%
Aftertax cost of debt 4.84%
Please check the answers and show all work typed out. No excel or grid style please as I am on mobile.
Homework Answers
| Maturity Value of bonds | 1000 | ||||
| Semi annual cash interest (1000*7%*6/12) | 35 | ||||
| PVf at 3.145% for 40th period | 0.289783 | ||||
| Annuity PVF at 3.145% for 40 periods | 22.58242 | ||||
| Present value of Maturity value | 289.783 | ||||
| Present value of Interest payments | 790.3847 | ||||
| Issue price | 1080.168 | ||||
| hence, Annual cost of debt = 3.145*2= 6.29% | |||||
| Pre-tax cost of debt = 6.29% | |||||
| After tax cost of debt = Pre-tax cost of debt (1-Tax rate) | |||||
| 6.29% (1-0.23) = 4.84% | |||||
Add Answer to:
Jiminy's Cricket Farm just issued a 20-year, 7 percent,
semiannual bond. The bond currently sells for...
Jiminy's Cricket Farm issued a 20-year, 7 percent, semiannual bond four years ago. The bond currently...
Jiminy's Cricket Farm issued a 20-year, 7 percent, semiannual bond four years ago. The bond currently sells for 108 percent of its face value. What is the company’s pretax cost of debt? What is the company’s aftertax cost of debt if the tax rate is 23 percent? *Answer should be Pretax cost of debt = 6.29%/ Aftertax cost of debt = 4.84%* **Show work please!**
Jiminy's Cricket Farm issued a 20-year, 7 percent, semiannual bond four years ago. The bond currently...
Jiminy's Cricket Farm issued a 20-year, 7 percent, semiannual bond four years ago. The bond currently sells for 108 percent of its face value. What is the company’s pretax cost of debt? What is the company’s aftertax cost of debt if the tax rate is 23 percent?
Jiminy's Cricket Farm issued a 20-year, 6 percent semiannual bond 2 years ago
Jiminy's Cricket Farm issued a 20-year, 6 percent semiannual bond 2 years ago. The bond currently sells for 92 percent of its face value. The company's tax rate is 35 percent. a. What is the pretax cost of debt?b. What is the aftertax cost of debt?c. Which is more relevant, the pretax or the aftertax cost of debt? Aftertax cost of debt Pretax cost of debt
Jiminy’s Cricket Farm issued a 30-year, 7 percent semiannual bond 3 years ago. The bond currently...
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, 6.3 percent semiannual bond eight years ago
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, 8%, semiannual bond 6 years ago. The bond currently sells...
Jiminy's Cricket Farm issued a 30-year, 8%, semiannual bond 6 years ago. The bond currently sells for 114% of its face value, what is the after-tax cost of debt if the company's tax rate is 31%?
Jiminy's Cricket Farm issued a 30-year, 8%, semiannual bond 6 years ago. The bond currently sells for 114% of its face value, what is the after-tax cost of debt if the company's tax rate is 31%?
Jiminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate...
Jiminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 7 percent 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 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...
Jiminy's Cricket Farm issued a 30-year, 5 percent semiannual coupon bond 3 years ago. The bond...
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...
Jiminy's Cricket Farm issued a 15-year, 5 percent semiannual coupon bond 3 years ago. The bond...
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 bond with 20 years to maturity and a semiannual coupon rate...
Jiminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 7 percent 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 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...
Jiminy's Cricket Farm issued a 30-year, 8%, semiannual bond 6 years ago. The bond currently sells for 114% of its face value, what is the after-tax cost of debt if the company's tax rate is 31%?
Jiminy's Cricket Farm issued a 30-year, 8%, semiannual bond 6 years ago. The bond currently sells for 114% of its face value, what is the after-tax cost of debt if the company's tax rate is 31%?
Jiminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 7 percent 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 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...
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...
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 bond with 20 years to maturity and a semiannual coupon rate of 7 percent 5 years ago. The bond currently sells for 94 percent of its face value. The company's tax rate is 24 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...
Most questions answered within 3 hours.
-
“We must differentiate our mindset first and our lessons
second.” (Dweck, 2012). What does this saying...
asked 58 minutes ago -
A plane is flying 192 m/s north relative to the air. The wind is
blowing 171...
asked 1 hour ago -
1. What is the concentration of HOAc in a 0.1M Acetate buffer,
pH 11.00?
(pKa for...
asked 1 hour ago -
What is the pressure of the gas in the flask when the levels of
water in...
asked 1 hour ago -
A team of 3 players is to be selected from a total of 10
players. What...
asked 1 hour ago -
(b) For a chi-squared distribution, find k when sample size is
30. P(k < X2 <...
asked 2 hours ago -
what was the average acceleration of the car from 40
seconds to 46 seconds? Include the...
asked 2 hours ago -
You wonder whether men or women are more likely to be driving
when both a man...
asked 2 hours ago -
Residents of two states were surveyed regarding whether or not
they were fans of professional football...
asked 2 hours ago -
how many constitutional isomers are there for a molecule having
the molecular formula c3h8o
asked 2 hours ago -
Someone asks you to explain what contribution margin per unit is
and how it can be...
asked 2 hours ago -
Read through Chapter 12 and the correlating Power Point and list
the 7 assumptions of the...
asked 2 hours ago