in order to build a new warehouse, ABC Co. is issuing new bonds at $1,270 to...

Question

Question

Answer 1

Answer #1

use excel function to find cost of debt

=RATE(nper,pmt,pv,fv)

=RATE(25*2,35.30,-1270,1000)*2

=5.13%

after tax cost of debt=5.13%*(1-39%)=3.13%

Answer 2

Similar Homework Help Questions

please answer all 4 multiple choice questions 843.86 What is the monthly payment amount on a...

please answer all 4 multiple choice questions 843.86 What is the monthly payment amount on a $100,000 home loan if the rate is 8.0% APR, and the loan is made for a 15-year period? 871.11 898.83 927.01 955.65 16 years Patrice plans to retire with $722,530 in the bank. The appropriate rate of return is 7.9%. If Patrice saves $13.200 every year, how soon can Patrice retire? 18 years 20 years 22 years 24 years marginal tax rate of 39%,...
THStructions 000010 (5 of 10) ABC Co. issues $1,000 par value, 6.5% semiannual coupon bonds, with...

THStructions 000010 (5 of 10) ABC Co. issues $1,000 par value, 6.5% semiannual coupon bonds, with 15 years to maturity. The company sells the bonds for $750. Find the after-tax cost of debt assuming a tax rate of 35%. 3.05% 4.85% 5.65% 6.31% SAVE ANSWER SKIP QUESTION IAM FINISHED/SUBMIT FOR GRADE Note: Clicking any button other than the Save Answer button will NOT save any changes to your answers!