5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? Round your answer to 2 decimal places.
1 | Face value (FV) | $ 1,600 |
2 | Coupon rate | 8.00% |
3 | Number of compounding periods per year | 2 |
1*2/3 | Interest per period (PMT) | $ 64.00 |
Bond price (PV) | $ (845.87) | |
4 | Number of years to maturity | 20 |
5 = 4*3 | Number of compounding periods till maturity (NPER) | 40 |
Bond yield to maturity | RATE(NPER,PMT,PV,FV)*2 | |
Bond yield to maturity | 15.84% | |
(Pre-tax cost of debt) | ||
Bond yield to maturity | 9.50% | |
(After-tax cost of debt) | 15.84%*(1-40%) |
Quantitative Problem: 5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,000 face value and a 12% coupon, semiannual payment ($60 payment every 6 months). The bonds currently sell for $845.87. If the firm's marginal tax rate is 25%, what is the firm's after-tax cost of debt? Do not round intermediate calculations. Round your answer to two decimal places.
Barton Industries can issue perpetual preferred stock at a price of $49 per share. The stock would pay a constant annual dividend of $3.50 per share. If the firm's marginal tax rate is 40%, what is the company's cost of preferred stock? Round your answer to 2 decimal places. 5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). The bonds currently sell for...
5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,000 face value and a 9% coupon, semiannual payment ($45 payment every 6 months). The bonds currently sell for $896.87. If the firm's marginal tax rate is 25%, what is the firm's after-tax cost of debt? Do not round intermediate calculations. Round your answer to two decimal places.
5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,000 face value and a 6% coupon, semiannual payment ($30 payment every 6 months). The bonds currently sell for $847.87. If the firm's marginal tax rate is 25%, what is the firm's after-tax cost of debt? Do not round intermediate calculations. Round your answer to two decimal places.
5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,000 face value and a 9% coupon, semiannual payment ($45 payment every 6 months). The bonds currently sell for $844.87. If the firm's marginal tax rate is 25%, what is the firm's after-tax cost of debt? Do not round intermediate calculations. Round your answer to two decimal places. %
5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,000 face value and a 6% coupon, semiannual payment ($30 payment every 6 months). The bonds currently sell for $894.87. If the firm's marginal tax rate is 25%, what is the firm's after-tax cost of debt? Do not round intermediate calculations. Round your answer to two decimal places. %
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