Homework Answers
1. Pre tax cost of debt=yield to maturity which is the cost for the debt=5.2%
2. After tax cost of debt=Pre tax cost of debt*(1-average tax rate)
Average tax rate is the share of income that one she pays in taxes. By contrast, a marginal tax rate is the tax rate imposed on dollar of income. Average tax rate is correct rate that what you pay exactly and we should take that.
After tax cost of debt=5.2%*(1-18%)=4.264%
Add Answer to:
Intro Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon...
Optum Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate...
Optum Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate of 3.2% and a yield to maturity of 5.9%. Optum Corp.'s average tax rate is 18% and its marginal tax rate is 31%. Q 1: What is the (pre-tax) cost of debt? Q 2: What is the after-tax cost of debt?
Intro A corporate bond has 19 years to maturity, a face value of $1,000, a coupon...
Intro A corporate bond has 19 years to maturity, a face value of $1,000, a coupon rate of 5.5% and pays interest twice a year. The annual market interest rate for similar bonds is 3.3%. - Attempt 1/10 for 9.5 pts. Part 1 What is the price of the bond (in $)? No decimals Submit Part 2 Attempt 1/10 for 9.5 pts. 2 years later, the market interest rate for similar bonds has gone up to 4.3%. What is the...
Intro Merk has 610 million shares oustanding that currently trade at $445. IB Attempt 1/5 for...
Intro Merk has 610 million shares oustanding that currently trade at $445. IB Attempt 1/5 for 10 pts. Part 1 If Merk pays a 80% stock dividend, what will be the new share price? No decimals Submit
Intro A corporate bond pays interest twice a year and has 18 years to maturity, a...
Intro A corporate bond pays interest twice a year and has 18 years to maturity, a face value of $1,000 and a coupon rate of 5.7%. The bond's current price is $1,373.42. It is callable starting 12 years from now (years to call) at a call price of $1,076. Attempt 2/5 for 9 pts. Part 1 What is the bond's yield to maturity? Enter your answer as a decimal. 4+ decimals Submit Attempt 1/5 for 10 pts. Part 2 What...
Problem 9 Intro A corporate bond has 22 years to maturity, a face value of $1,000,...
Problem 9 Intro A corporate bond has 22 years to maturity, a face value of $1,000, a coupon rate of 5.4% and pays interest semiannually. The annual market interest rate for similar bonds is 3.1%. Attempt 1/1 for 10 pts. Part 1 What is the price of the bond? No decimals Submit
Intro Long Gone Corp. had total operating expenses of $84 million last year, including depreciation, and...
Intro Long Gone Corp. had total operating expenses of $84 million last year, including depreciation, and paid $5.2 million in interest. The company also paid out $54 million in dividends, while the addition to retained earnings increased equity by 50%. The average tax rate was 34% and the average interest rate on the company's debt was 6.5%. The payout ratio was 20%. IB Attempt 1/10 for 10 pts. Part 3 What was the equity multiplier? k+ decimals Submit
Intro 8 years ago, a new machine cost $8 million to purchase and an additional $490,000...
Intro 8 years ago, a new machine cost $8 million to purchase and an additional $490,000 for the installation. The machine was to be linearly depreciated to zero over 15 years. The company has just sold the machine for $4.8 million, and its marginal tax rate is 25%. Part 1 Attempt 1/5 for 10 pts. What is the annual depreciation? No decimals Submit IB Attempt 1/5 for 10 pts. Part 2 What is the current book value? No decimals Submit...
Problem 13 Intro Use the following bond quotation: Issuer Symbol Callable Coupon Maturity Walmart WMT.IM No...
Problem 13 Intro Use the following bond quotation: Issuer Symbol Callable Coupon Maturity Walmart WMT.IM No 4.875 7/8/2040 Rating Aa2 Price 97.94 Yield 5.04 - Attempt 1/5 for 10 pts. Part 1 What is the yield to maturity? Enter your answer as a decimal. 3+ decimals Submit Part 2 - Attempt 1/5 for 10 pts. If the bond has a face value of $1,000, how much does it currently cost (in $, and ignoring accrued interest)? 0+ decimals Submit
Problem 4 Intro Lomack Company's bonds have a 11-year maturity, a 10% coupon, paid semiannually, and...
Problem 4 Intro Lomack Company's bonds have a 11-year maturity, a 10% coupon, paid semiannually, and a par value of $1,000. The market interest rate is 3%, with semiannual compounding. Part 1 What is the bond's price (in $)? B Attempt 1/10 for 10 pts. No decimals Submit Problem 5 Intro A corporate bond has 16 years to maturity, a face value of $1,000, a coupon rate of 4.9% and pays interest twice a year. The annual market interest rate...
Intro 8 years ago, a new machine cost $8 million to purchase and an additional $490,000...
Intro 8 years ago, a new machine cost $8 million to purchase and an additional $490,000 for the installation. The machine was to be linearly depreciated to zero over 15 years. The company has just sold the machine for $4.8 million, and its marginal tax rate is 25% Attempt 1/5 for 10 pts. Part 1 What is the annual depreciation? No decimals Submit IB Attempt 1/5 for 10 pts. Part 2 What is the current book value? No decimals Submit...
Intro A corporate bond has 19 years to maturity, a face value of $1,000, a coupon rate of 5.5% and pays interest twice a year. The annual market interest rate for similar bonds is 3.3%. - Attempt 1/10 for 9.5 pts. Part 1 What is the price of the bond (in $)? No decimals Submit Part 2 Attempt 1/10 for 9.5 pts. 2 years later, the market interest rate for similar bonds has gone up to 4.3%. What is the...
Intro Merk has 610 million shares oustanding that currently trade at $445. IB Attempt 1/5 for 10 pts. Part 1 If Merk pays a 80% stock dividend, what will be the new share price? No decimals Submit
Intro A corporate bond pays interest twice a year and has 18 years to maturity, a face value of $1,000 and a coupon rate of 5.7%. The bond's current price is $1,373.42. It is callable starting 12 years from now (years to call) at a call price of $1,076. Attempt 2/5 for 9 pts. Part 1 What is the bond's yield to maturity? Enter your answer as a decimal. 4+ decimals Submit Attempt 1/5 for 10 pts. Part 2 What...
Problem 9 Intro A corporate bond has 22 years to maturity, a face value of $1,000, a coupon rate of 5.4% and pays interest semiannually. The annual market interest rate for similar bonds is 3.1%. Attempt 1/1 for 10 pts. Part 1 What is the price of the bond? No decimals Submit
Intro Long Gone Corp. had total operating expenses of $84 million last year, including depreciation, and paid $5.2 million in interest. The company also paid out $54 million in dividends, while the addition to retained earnings increased equity by 50%. The average tax rate was 34% and the average interest rate on the company's debt was 6.5%. The payout ratio was 20%. IB Attempt 1/10 for 10 pts. Part 3 What was the equity multiplier? k+ decimals Submit
Intro 8 years ago, a new machine cost $8 million to purchase and an additional $490,000 for the installation. The machine was to be linearly depreciated to zero over 15 years. The company has just sold the machine for $4.8 million, and its marginal tax rate is 25%. Part 1 Attempt 1/5 for 10 pts. What is the annual depreciation? No decimals Submit IB Attempt 1/5 for 10 pts. Part 2 What is the current book value? No decimals Submit...
Problem 13 Intro Use the following bond quotation: Issuer Symbol Callable Coupon Maturity Walmart WMT.IM No 4.875 7/8/2040 Rating Aa2 Price 97.94 Yield 5.04 - Attempt 1/5 for 10 pts. Part 1 What is the yield to maturity? Enter your answer as a decimal. 3+ decimals Submit Part 2 - Attempt 1/5 for 10 pts. If the bond has a face value of $1,000, how much does it currently cost (in $, and ignoring accrued interest)? 0+ decimals Submit
Problem 4 Intro Lomack Company's bonds have a 11-year maturity, a 10% coupon, paid semiannually, and a par value of $1,000. The market interest rate is 3%, with semiannual compounding. Part 1 What is the bond's price (in $)? B Attempt 1/10 for 10 pts. No decimals Submit Problem 5 Intro A corporate bond has 16 years to maturity, a face value of $1,000, a coupon rate of 4.9% and pays interest twice a year. The annual market interest rate...
Intro 8 years ago, a new machine cost $8 million to purchase and an additional $490,000 for the installation. The machine was to be linearly depreciated to zero over 15 years. The company has just sold the machine for $4.8 million, and its marginal tax rate is 25% Attempt 1/5 for 10 pts. Part 1 What is the annual depreciation? No decimals Submit IB Attempt 1/5 for 10 pts. Part 2 What is the current book value? No decimals Submit...
Most questions answered within 3 hours.
-
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 1 hour ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 1 hour ago -
implement a program that reads a number of rows and a symbol.
The program will draw...
asked 1 hour ago -
Assume that when adults with smartphones are randomly selected,
45% use them in meetings or classes....
asked 1 hour ago -
Determine the number of formula units of
Na2SO4 and moles of oxygen contained in 8.11
moles...
asked 1 hour ago -
Explain in steps on the following code
What would be the output when executed
using System;...
asked 1 hour ago -
Given the information in the table, which of the following
statements is CORRECT?
Stock A
Stock...
asked 1 hour ago -
Write MARIE assembly language programs that do the following:
Write a program that inputs an integer...
asked 1 hour ago -
Explain an understanding of services and protocols.
Explain the job of DNS.
Explain the three email...
asked 2 hours ago -
(As soon as possible) Balance each of the following equations
according to the half-reaction method:
H2O2(aq)...
asked 2 hours ago -
A thin rod with a mass of 3.5kg and a length L=1.5 m is oriented
horizontally....
asked 2 hours ago -
Inheritance pattern in BRCA 1
Describe the inheritance pattern of BRCA 1 Is it recessive or...
asked 2 hours ago