Company X pays interest to the amount of R1 500 a year on total liabilities of R10 000. It can also issue bonds with a YTM of 12%. What will the relevant before tax cost of debt be when calculating that WACC for the company? a. 18% b. 12% c. 15% d. 8%

TI209 JADMANE BO Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% for the long-term borrowings, and 10.5% on the mortgage. The shareholders expect to earn 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. 2. Calculate the company's weighted average cost of capital.

22 The following information is available for three companies. Rope Company $ 364,000 Face value of bonds payable Interest rate Income tax rate 6% 35% Chain Company $ 620,000 5% 20% Line Company $ 538,000 4% 25% Required a. Determine the annual before-tax interest cost for each company in dollars. b. Determine the annual after-tax interest cost for each company in dollars. c. Determine the annual after-tax interest cost for each company as a percentage of the face value of the bonds.

What will be the cost of a bond issue after tax by the company XYZ SA, if the country has a tax rate of 20%, a nominal value of US $ 2,500.00, market value of 99.50%, interest rate of 10.50%, financial expenses for placement of 0.75% and it is a 10-year issue:

Listed below are the current liability section and Note 7 of the Year 7 balance sheet of Joli Roma Corporation (the Company), a major oil company. $ millions Year 7 Year 6 Current Liabilities Current portion of long-term obligations Short-term obligations Accounts payable Accrued liabilities Taxes payable (including income taxes) $175 $89 691 530 2,996 3,196 1,046 1,099 1,289 997 $6,197 $5,911 Note 7 Short-Term Obligations The Company's "short-term obligations" consist of notes payable and commercial paper. Notes payable as of December 31, Year 7, totaled $102 million at an average annual interest rate of 5.7%, compared with $29 million at an average annual interest rate of 5.7% at year-end Year 6. Commercial paper borrowings at December 31, Year 7, were $839 million at an average annual interest rate of 5.7% compared with $260 million at an average annual interest rate of 5.9% as of December 31, Year 6. Bank lines of credit available to support existing commercial paper borrowings of…

Cost of debt

debt information -$1,000,000,000 in outstanding debt (face value) -current coupon rate = 9% (semiannual coupons) -current quote = 110 -15 years maturity -tax rate 40% a) what is the cost of debt? b) what is the after tax cost of debt?

1. If the quoted price of a corporate bond is “ 105”, that means the bond price is a. $105      b. $1050     c. $1105     d. $995 2. The present value of $1000 to be received in 5 years is — if the discount rate is 12.78% a. $368    b. $494     c. $548    d. $687 3. At what rate must $287.50 be compounded annually for it to grow to $$650.01 in 14 years? a. 6 percent   b. 5 percent    c. 7 percent    d. 8 percent