ZuoTi.Pro
Question

COST OF DEBT. The coupon rate of a bond with a maturity of 10 years is...

COST OF DEBT. The coupon rate of a bond with a maturity of 10 years is 9.5%. This bond pays interest semi-annually. Tax rate is 20%. Suppose this bond is currently selling for $1,131. Calculate the after-tax cost of debt for the issuing firm.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)

All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
COST OF DEBT. The coupon rate of a bond with a maturity of 10 years is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Similar Homework Help Questions

  • Bond Valuation Time to Maturity (Years) Coupon Rate Required Return Frequency Bond Valuations This bond has...

    Bond Valuation Time to Maturity (Years) Coupon Rate Required Return Frequency Bond Valuations This bond has 20 years to maturity Coupon rate Current required return 9.00 % Semi Annual interest payments 8.00% Face Value Value cach year $1,000.00 Par value 20 Find the value of this bond for each of the 18 years to maturity listed 16 14 Why does the value of the bond continue to increase over time? 12 10 Is this bond currently selling for a premium...

  • Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making...

    Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making payments semi-annually, a face value of $1000 that currently sells for $957? What is your firm's cost of debt? (Enter your response as a percentage with two decimal places, ex: 12.34)

  • Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making...

    Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making payments semi-annually, a face value of $1000 that currently sells for $957? What is your firm's cost of debt? (Enter your response as a percentage with two decimal places, ex: 12.34)

  • Cost of Debt Jones, Inc has one outstanding bond issue, which has twelve years remaining to...

    Cost of Debt Jones, Inc has one outstanding bond issue, which has twelve years remaining to maturity and a coupon rate of 2.325%. Interest payments are made semi-annually, the firm’s tax rate is .35, and the bonds are currently trading at $1,021.00. What is the yield to maturity on the bonds? Ignoring flotation costs, what is the firm’s cost of debt (before tax)? What is its after-tax cost of debt?

  • JPR, Inc has one outstanding bond issue, which has seventeen years remaining to maturity and a...

    JPR, Inc has one outstanding bond issue, which has seventeen years remaining to maturity and a coupon rate of 4.875%. Interest payments are made semi-annually, the firm’s tax rate is .40, and the bonds are currently trading at $928.00. a. What is the yield to maturity on the bonds? b. Ignoring flotation costs, what is the firm’s cost of debt (before tax)? c. What is its after-tax cost of debt?

  • Debt 5,000 bonds par $1,000 with a maturity 20 years; semi annual compounding. Coupon rate 8%....

    Debt 5,000 bonds par $1,000 with a maturity 20 years; semi annual compounding. Coupon rate 8%. Price $1,310. Tax rate=33% Preferred 50,000 shares of 3% par value $100 stock. Current price $63.00. Common stock 72,000 shares currently selling for $87.00. The beta of the firm is 1.17, the risk free rate is 2.78%, Market return (Rm) =8.6%. What is the cost of Debt; Cost of Preferred Stock; Cost of Equity and what is the WACC?

  • Additional Problems with Answers Problem 1 Cost of debt for a firm: You have been assigned...

    Additional Problems with Answers Problem 1 Cost of debt for a firm: You have been assigned the task of estimating the after-tax cost of debt for a firm as part of the process in determining the firm's cost of capital. After doing some checking, you find out that the firm's original 20-year 9.5% coupon bonds (paid semi-annually), currently have 14 years until they mature and are selling at a price of $1,100 each. You are also told that the investment...

  • Shanken Corp. issued a bond with a maturity of 10 years and a semiannual coupon rate...

    Shanken Corp. issued a bond with a maturity of 10 years and a semiannual coupon rate of 10 percent 4 years ago. The bond currently sells for 94 percent of its face value. The book value of the debt issue is $55 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 14 years left to maturity; the book value of this issue is $30 million and the bonds sell for 55...

  • 13. Lost of debt) Melbourne, Inc. cu in the 35% marginal tax rate. what is its...

    13. Lost of debt) Melbourne, Inc. cu in the 35% marginal tax rate. what is its after ta (After-tax cost of debt) FitBite, Inc. cu a coupon rate of 6%, priced at what is its after-tax cost of a (Cost of preferred stort yield to maturity of 7.9% oure, Inc. currently has 3 bonds with a yield to maturity of 45. Vt it is "Is its after-tax cost of debt? Site, Inc. currently has an outstanding bond that pays interest...

  • Question 25 1 pts Your firm has a bond with 12 years to maturity, a coupon...

    Question 25 1 pts Your firm has a bond with 12 years to maturity, a coupon rate of 4.5% making payments semi-annually, a face value of $1000 that currently sells for $957? What is your firm's cost of debt? (Enter your response as a percentage with two decimal places, ex: 12.34)

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT