Problem 11-9 Approximate yield to maturity and cost of debt [LO3] Airborne Airlines Inc. has a $1,000 par value bond outstanding with 15 years to maturity. The bond carries an annual interest payment of $94 and is currently selling for $940. Airborne is in a 35 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.
a. Compute the yield to maturity on the old issue and use this as the yield for the new issue. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Yield on new issue %
b. Make the appropriate tax adjustment to determine the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Aftertax cost of debt %
Problem 11-9 Approximate yield to maturity and cost of debt [LO3] Airborne Airlines Inc. has a...
Airborne Airlines Inc. has a $1,000 par value bond outstanding with 10 years to maturity. The bond carries an annual interest payment of $84 and is currently selling for $890. Airborne is in a 30 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk...
Problem 11-10 Approximate yield to maturity and cost of debt [L011-3] Russell Container Corporation has a $1,000 par value bond outstanding with 30 years to maturity. The bond carries an annual interest payment of $126 and is currently selling for $880 per bond. Russell Corp. is in a 40 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be...
Octopus Transit has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $94, payable semiannually, and is currently selling for $1,100. Octopus is in a 35 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the...
Russell Container Corporation has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $119 and is currently selling for $940 per bond. Russell Corp. is in a 40 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue...
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Problem 11-10 Approximate yield to maturity and cost of debt (LO11-3] Bull Container Corporation has a $1000 par value bond outstanding with 30 years to maturity. The bond carries an annual interest payment of 50s and is cuently selling for $880 per bond Russel Corp. isina 40 percent tax bracket. The firm wishes to know what the test out of a new bond issue is kely to be. The yield to maturity on the new sewe be...
Airborne airlines Inc. has a $1000 par value bond outstanding with 20 years to maturity. The bomb carries an annual interest payment of $106 and is currently selling for $860. airborne is in a 40% tax bracket. The firm wishes to know what the after-tax cost of a new bond issue is likely to be. The yield to maturity on the issue will be the same as the yield to maturity on the old issue because the risk immaturity date...
Octopus Transit has a $1,000 par value bond outstanding with 10 years to maturity. The bond carries an annual interest payment of $96, payable semiannually, and is currently selling for $1,101. Octopus is in a 40 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the...
Russel Container Corporation has a $1.000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $99 and is currently selling for $920 per bond Russell Corp. isina 25 percent wacket. The firm wishes to know what the aftertax cost of a new bond issue isely to be. The yeld to maturity on the new issue will be the same as the yield o mahnity on the old issue because there and many...
Keyspan corp. is planning to issue debt that will mature in
2033. In many respects, the issue is similar to the currently
outstanding debt of the corporation. Use Table 11-3.
a. Calculate the yield to maturity on similarly
outstanding debt for the firm in terms of maturity. (Input
your answer as a percent rounded to 2 decimal places.)
Assume that because the new debt will be issued at par, the
required yield to maturity will be 0.12 percent higher...
Compute the yield to maturty the new issue. ftertax cost of debt tstanding with grow a. b. te tax adjustment to determine the aftertax co Make the appropria 30 years to maturity. The bond carries an annual interest payment currently selling for $880 per bond. Russell Corp. is in a 40 percer The firm wishes to know what the aftertax cost of a new bond is of $105 and ed t and cost of Russell Container Corporation has a $1.000...