Question

Can you please show me how to do this with BA II Plus Financial Calculator? CCan you please show me how to do this with BA II Plus Financial Calculator?

22. Calculating the Cost of Debt Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. If the corporate tax rate is 24 percent, what is the aftertax cost of the company's debt? Bond Coupon Rate Price Quote Maturity Face Value NM 6.5% 5.3 6.9 7.3 109.0 97.4 110.5 109.8 5 years 8 years 1512 years 25 years $30,000,000 50,000,000 65,000,000 85,000,000

Answer 1

Step 1:
N=5*2
PMT=6.5%*100/2
PV=-109
FV=100
CPT I/Y=2.24%

Step 2:
N=8*2
PMT=5.3%*100/2
PV=-97.4
FV=100
CPT I/Y=2.85%

Step 3:
N=15.5*2
PMT=6.9%*100/2
PV=-110.5
FV=100
CPT I/Y=2.93%

Step 4:
N=25*2
PMT=7.3%*100/2
PV=-109.8
FV=100
CPT I/Y=3.25%

Step 5:
=(30*109%*2.24%+50*97.4%*2.85%+65*110.5%*2.93%+85*109.8%*3.25%)/(30*109%+50*97.4%+65*110.5%+85*109.8%)*2*(1-24%)
=4.48%