A bond has a $15million face value and a coupon rate of 9 percent. It has floatation costs of 5 percent     of the face value. The bond matures in 10 years. The firm’s average tax rate is 30 percent and its marginal tax rate is 21 percent. Compute the after-tax cost of debt.

Q: The Holmes Company's currently outstanding bonds have an 8% coupon and a 14% yield to maturity.…

A: In the given case, we have provided the yield to maturity and the marginal tax rate.So, the yield to…

Q: that the firm will always be able to utilize its full interest tax shield.

A: Cost of debt is nothing but YEILD to MATURITY and consider the tax effect on cost of debt will give…

Q: You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity,…

A: Note: Since here Face Value is not given, It is assumed out to be $1000, and accordingly the…

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Q: Describe term net asset value (NAV)?

A: Net asset value (NAV): It describes an entity's net worth, which is measured as the complete value…

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A: Yield to maturity (YTM) is an estimated rate of return.YTM is based on the assumption that the…

Q: Avicorp has a $14.6 million debt issue outstanding, with a 5.8% coupon rate. The debt has…

A: Cost of debt refers to the minimum cost that a company has to bear for raising funds through the…

Q: The coupon rate on an issue of debt is 9%. The yield to maturity on this issue is 10%. The corporate…

A: Yield to Maturity is the total return anticipated on a bond if it is held until it matures. It takes…

Q: P&G has a 15-year, semiannual coupon bond with $1,000 par value. The coupon rate is 4% and the…

A: Here, The coupon payment is ‘C’ Face value or par value is ‘FV’

Q: Appraiser John is evaluating a 1,200-square-foot log cabin, whose owner is refinancing. He…

A: Total square foot = 1,200 Cost of replacement = $80 Depreciation = 20%  Value of land = $48,000

Q: Suppose ABE Co. issued a 18-year, 8 percent coupon rate bond six years ago. The bond is currently…

A: Calculation of the after tax Kd (cost of debt) is shown below: Hence, the after tax Kd is 7.00%.

Q: The coupon rate on a debt issue is 6%. If the yield to maturity on the debt is 9%, what is the…

A: Before tax cost of debt = YTM on the bond

Q: Laurel, Inc., has debt outstanding with a coupon rate of 5.8% and a yield to maturity of 7.1%. Its…

A: The objective of the question is to calculate the effective after-tax cost of debt for Laurel, Inc.…

Q: The yield to maturity on SodaFizz’s debt is 7.2%. If the company’s marginal tax rate is 21%, what is…

A: The cost of debt refers to the effective rate that a company pays on its debt such as bonds and…

Q: 3. Avicorp has a $12.3 million debt issue​ outstanding, with a 6.1% coupon rate. The debt has​…

A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…

Q: What is the after tax cost of debt if the company's bond with a coupon rate of 9% is selling above…

A: The objective of this question is to calculate the after-tax cost of debt for a company. The cost of…

Q: St. Thomas Company is planning to issue $1,000 par value bonds.  The bonds will have a coupon rate…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: Avicorp has a $ 10.2 million debt issue outstanding, with a 5.8 % coupon rate. The debt has semi-…

A: The objective of the question is to calculate Avicorp's pre-tax cost of debt and its after-tax cost…

Q: Avicorp has a $10.7 million debt issue outstanding, with a 5.8% coupon rate. The debt has…

A: Yield to maturity can be calculated by following function in excel=RATE (nper, pmt, pv, [fv],…

Q: Your firm has a bond issue with a face value of $500,000 outstanding. These bonds have a coupon rate…

A: The use of debt comes with an advantage. The advantage is that coupon payments or interest payments…

Q: corporate bond has a face value of $1,000 and a coupon rate of 8.25%, paid annually. The bond…

A: The annual coupon payment on the bond is calculated below

Q: Lugget Corp. has one bond issue outstanding with an annual coupon of 4.4%, a face value of $1,000…

A: Pre tax cost of debt refers to the Yield to Maturity (YTM) of the bond. This can be calculated by…

Q: Estimate Dixon's marginal pre-tax cost of debt.

A: Yield to Maturity refers to the rate of interest earned till the maturity of the bond by the bond…

Q: The Holmes Company's currently outstanding bonds have a 9% coupon and an 11% yield to maturity.…

A: The effective interest rate that a business pays on its debt commitments is known as the cost of…

Q: What is the company’s pretax cost of debt?

A: The before-tax cost of debt is called yield to maturity or YTM. This is the discount rate at which…

Q: Sincere Stationary Corporation needs to raise $500,000 to improve its manufacturing plant. It has…

A: a. The formula to calculate price of bond is given below,

Q: onsider a firm whose debt has a market value of $35 million and whose stock has a market value of…

A: GIVEN, DEBT = $35 EQUITY=$55 rf = 1% beta = 1.23 risk premium = 10.5%

Q: Suppose that LilyMac Photography expects EBIT to be approximately $230,000 per year for the…

A: Step 1:Step 1: Given the following informationGiven that Lily Mac photography  has the following…

Q: Mojo Mining has a bond outstanding that sells for $2,080 and matures in 16 years. The bond pays…

A: The after-tax cost of debt can be found by deducting the tax rate from the YTM. The YTM is an…

Q: Your company is borrowing $5,800,000 in the form of bonds. The par value and market value are the…

A: Bonds are debt securities issued by Government or other companies, who seek to raise money from…

Q: Comet Chasers has a bond outstanding that sells for $1,052 and matures in 22 years. The bond pays…

A: Excel Spreadsheet:

Q: Walter Corp.'s outstanding bonds have a 5.8% coupon, 5 years left until maturity, and are currently…

A: Given, Price = $974.67 Coupon rate = 5.8% Number of years = 5 Tax = 0.25 Assume the par value of…

Q: ) Your firm wishes to issue a 20-year bond, an annual coupon of 6%, and the price has been…

A: FV = 1000Coupon Rate = 6%Tenure = 20Coupon Payment = 1000 x 6% = 60Tax Rate = 24%

Q: Easy Slider recently sold a 15 year $1,000 face value bond at a discount for $800 that net the firm…

A: After tax cost of debt = Before tax cost of debt x (1-tax rate)Before tax cost of debt = Yield to…

Q: The Holmes Company's currently outstanding bonds have a 7% coupon and a 13% yield to maturity.…

A: After tax cost of debt = Before tax cost of debt * (1-tax rate)

Q: McQuinty, Inc. has a beta of 1.34 and a marginal tax rate of 31%. The company has one bond issue…

A: The cost of debt refers to the return that the company provides to all its debtholders for their…

Q: A company has $5 million in debt outstanding with a coupon rate of 12%. Currently, the yield to…

A: The provided information are: Tax rate = 40% = 0.40 Yield to maturity = 0.14

Q: A company needs to raise $20 million and is considering issuing 5-year bonds for this purpose.…

A: The bonds are redeemed at their par-value with regular coupon payments but when bonds are not…

Q: The June Bug has a $270,000 bond issue outstanding that matures in 22 years. These bonds have a 7.6…

A: We Can Determine the Interest Tax Shield Using The Following Equation:Interest tax shield = Face…

Q: A company's 5-year bonds are yielding 8% per year. Treasury bonds with the same maturity are…

A: Default risk premium is the premium due to the risk involved on corporate on default of payment of…

Q: The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate…

A: Information Provided: Coupon rate = 8% Yield to maturity = 10% Tax rate = 21%

Q: LL Incorporated’s currently outstanding 7 percent coupon bonds have a yield to maturity of 6…

A: It is a case of calculating the after-tax cost of debt. The YTM (yield to maturity) is the cost of…

Q: u Ltd is planning to issue bonds with 4 years to maturity and a face value of $100. The coupon rate…

A: Bonds are sources of finance and they are paid annual periodic interest payments and par value is…

Q: Avicorp has a $14.3 million debt issue outstanding, with a 5.9% coupon rate. The debt has…

A: A bond is a kind of debt security issued by the government and private companies for raising funds…