Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond currently sells for 93 percent of its face value. The Company’s tax rate is 35%. i) a. What is the pre-taxed cost of debt?    b. What is the after tax cost of debt?    c. Which is more relevant, the pre-tax or the after- tax cost of debt? Why? ii) In question above, suppose the book value of the debt issues is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years to mature. The book value of this issue is $35 million and the bond sell for 57 percent of par. a. What is the company’s total book value of debt? b. The total market value? c. What is your best estimate of the after-tax cost of debt now?

​ Temple-Midland, Inc. is issuing a ​$1,000 par value bond that pays 7.5 percent annual interest and matures in 15 years. Investors are willing to pay ​$949 for the bond and Temple faces a tax rate of 32 percent. What is​ Temple's after-tax cost of debt on the​ bond?       Question content area bottom Part 1 The​ after-tax cost of debt is_____%

At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,050.76 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If WPC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) O 7.84% O 7.51% 5.88% 6.53%

Jiminy’s Cricket Farm issued a 25-year, 5 percent semiannual coupon bond 6 years ago. The bond currently sells for 106 percent of its face value. The company’s tax rate is 25 percent. What is the company’s pretax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the company’s aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

An investor is comparing the following two bonds: a bond from ABC Corp which pays an interest rate of 9 percent per year and a municipal bond which pays an interest rate of 7.9 percent per year. The investor is in the 22 percent tax bracket. Which bond will give the investor a higher after-tax interest rate and for which reason?   a. The ABC bond because it pays a 9 percent interest rate, while the municipal bond only pays 7.9 percent.   b. None of these is correct.   c. The ABC bond because it pays an equivalent after-tax rate of 11.5 percent, while the municipal bond pays out an equivalent after-tax rate of 10.1 percent.   d. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an after-tax 7.02 percent interest rate.   e. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an equivalent after-tax rate of 2.0 percent.

1. Alpha Co. is planning to issue bonds semiannuallywith a coupon rate of 8%, issued and 30 years to maturity. Assume the nominal interest rate on  bonds is 7%. The par value of $1,000.  What is the value of the coupon for the bondholder will receive? 2. A lessee and lessor face the same tax rate interest rate. Also, there are no transaction costs. The net advantage to leasing for the lessor is $450.  Under these conditions, what is the net advantage to leasing be for the lessee under this proposed lease payment? (I answered $450 but it was wrong)

Manshukh

A company issues a bond with a par value of $500,000 and a contract rate of 5%. Explain the concept of market rate. Why would a company issue a bond at a discount or a premium? How is bond price impacted? If the bond is issued at a discount or a premium, does it impact the interest or principal paid? Why or why not? (Answer in 5-10 sentences)

Beckham Corporation has semiannual bonds outstanding with nine years to maturity that are currently priced at $794.08. If the bonds have a coupon rate of 6 percent, then what is the after-tax cost of debt for Beckham if its marginal tax rate is 27 percent? Complete the calculation as is done on Wall Street. none of these 7.06% 9.45% 7.28% 6.89%

Jiminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 6 percent 3 years ago. The bond currently sells for 103 percent of its face value. The company's tax rate is 22 percent. a. What is the pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Pretax cost of debt b. Aftertax cost of debt % %