Micro Spinoffs Inc. issued 20-year debt a year ago at par value with a coupon rate of 6%, paid annually. Today, the debt is selling at $1,130. If the firm’s tax bracket is 30%, what is its percentage cost of debt? Assume a face value of $1,000. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
The cost of debt without tax is:
=RATE(nper,pmt,pv,fv)
=RATE(20,6%*1000,-1130,1000)
=4.96%
After tax cost of debt:
=4.96%*(1-0.30)
=3.47%
Micro Spinoffs Inc. issued 20-year debt a year ago at par value with a coupon rate...
Micro Spinoffs Inc. issued 10-year debt a year ago at par value with a coupon rate of 8%, paid annually. Today, the debt is selling at $1,280. If the firm’s tax bracket is 21%, what is its percentage cost of debt? Assume a face value of $1,000. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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necmeuldLIILLUMIWLUMCLLIT Saved Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not ind Problem 13-20 Cost of Debt (L04) Micro Spinoffs Inc. issued 10-year debt a year ago at par value with a coupon rate of 6%, paid annually. Today, the debt is selling at $1,080. If the firm's tax bracket is 21%, what is its percentage cost of debt? Assume a face value of $1,000. (Do not...
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