Ladder Works has debt outstanding with a coupon rate of 6 percent and a yield to maturity of 6.8 percent. What is the aftertax cost of debt if the tax rate is 21 percent? Assume all interest is tax deductible. 5.62% 5.82% 5.37% 4.86%
Q: Starset, Incorporated, has a target debt-equity ratio of 0.76. Its WACC is 10.5 percent, and the tax…
A: Pretax cost of debt can be calculated through the WACC equation and debt-equity ratio. Here…
Q: A bond has a $15million face value and a coupon rate of 9 percent. It has floatation costs of 5…
A: The cost of raising the funds through borrowing or the financing cost is termed as the required rate…
Q: The following is the information on debt issued by Huntington Power Co. Calculate the after-tax cost…
A: Interest on debt is a tax deductible expense, that's why after tax cost of debt is taken.
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: Calculating the WACC In the previous problem, suppose the company's stock has a beta of 1.10. The…
A: Capital structure refers to the proportion of debt and equity capital raised by the company in order…
Q: A company finances its operations with 60 percent debt and the rest using equity. The annual yield…
A: Given: Debt (D) = 60% Equity (E) = 40% Cost of debt (rd) = 4.1% Cost of equity (re) = 12.4% Tax =…
Q: The yield to maturity on SodaFizz’s debt is 7.2%. If the company’s marginal tax rate is 21%, what is…
A: To calculate the effective cost of debt we will use the below formula Effective cost of debt =…
Q: Avicorp has a $13.3 million debt issue outstanding, with a 6.1% coupon rate. The debt has…
A: Yield-to-Maturity is IRR for Bond Payments that shows effective return that an investor will receive…
Q: 9. Avicorp has a $11.7 million debt issue outstanding, with a 5.8% coupon rate. The debt has…
A: The cost of debt is the yield to maturity of a bond. It is the rate at which borrowed funds can be…
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: Sixx AM Manufacturing has a target debt-equity ratio of 0.7. Its cost of equity is 17 percent, and…
A: WACC = Weight of debt * Cost of debt + Weight of equity * Cost of equity Cost of debt = Cost * ( 1 -…
Q: DQ, Inc. expects EBIT to be approximately $11.4 million per year for the foreseeable future, and it…
A: EBIT - $11.40 million Bond :no of bonds- 20,000 Interest rate -10% Face value - $1000 Annual…
Q: Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22…
A: Kose, Inc., has a target debt-equity ratio of 1.31. Its WACC is 8.1 percent, and the tax rate is 22…
Q: A firm has outstanding debt with a coupon rate of 8%, nine years maturity, and a price of $1,000…
A: Yield to maturity is equal to par value of coupon rate , Bond is equal to par value and as it same…
Q: Laurel, Inc., has debt outstanding with a coupon rate of 6.1% and a yield to maturity of 7.2%. Its…
A: Effective after tax cost of debt = Before tax cost of debt (YTM) * (1- tax rate)
Q: Fama's Llamas has a weighted average cost of capital of 10 percent. The company's cost of equity is…
A: Debt-Equity Ratio is long-term solvency ratio of company. It is calculated by dividing debt by…
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: Calculate the after-tax cost of debt under each of the following conditions: rdof 13%, tax rate of…
A: 1. After tax cost of debt = Cost of debt * (1- Tax rate) After tax cost of debt = 13% * (1-0%) After…
Q: Madoff Corporation raised money through a bond issue with a total principal value of $3,000,000.…
A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…
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: Compute the cost of capital for the firm with a bond selling to yield 12.9 percent for the purchaser…
A: WACC is estimated cost of incurred by an entity to finance their capital structure that is computed…
Q: Simple Corp. has one bond issue oustanding, with a maturity of 10.5 years, a coupon rate of 3.6% and…
A: Here, Maturity = 10.5 years Coupon rate = 3.6% Yield to maturity = 5.4% Average tax rate = 18%…
Q: Laurel, Inc., has debt outstanding with a coupon rate of 5.8% and a yield to maturity of 6.8%. Its…
A: Effective after-tax cost of debt The interest paid on debt less any income tax savings owing to…
Q: Terrier Company is in a 50 percent tax bracket and has a bond outstanding that yields 12 percent to…
A: A debt is a security instrument that I s issued by the organization to raise the funds from the…
Q: Austin's Cookies has a return on assets of 7.8 percent and a cost of equity of 11.9 percent. What is…
A: Weighted Average Cost of Capital (WACC) is the overall cost of capital from all the sources of…
Q: Lionel Company has 1,500 units of bonds outstanding. Each unit has $100 face value, 6% coupon rate…
A: Here, Units of Bond is 1,500 Face Value of Each Bond is $100 Coupon Rate is 6% Coupon Compounding…
Q: Avicorp has a $12.8 million debt issue outstanding, with a 5.9% coupon rate. The debt has…
A: Let Face value = $1000 Current Price = 93% of par value = $930 Coupon rate = 5.9% Semi annual rate =…
Q: If a 5 year annual bond with a 6% coupon rate, currently priced at $988 and par value is $1000, what…
A: Borrowings are the liability of the company which is used to finance the requirement of the funds.…
Q: What would be BAT's current before-tax component cost of debt? a. What would be BAT's current…
A: Cost of Debt: It is the cost of raising debt capital for the company and the such cost of debt is…
Q: Laurel, Inc., has debt outstanding with a coupon rate of 5.8%and a yield to maturity of 7.1%.Its…
A: For the calculation of effective after tax cost of debt we will use the below formula After tax…
Q: Lewis, Schultz, and Nobel Development Corp. have an after-tax cost of debt of 4.5%. With a tax rate…
A: In this question we are given after tax cost of debt and tax rate and we need to compute the Yield…
Q: AXYZ Co's. bond has a $1,000 face value and a coupon rate of 6.2% paid annually. The firm's marginal…
A: Calculation of cost of debt after tax:Answer:Cost of debt after-tax rate is 4.03% and 4.65%, tax cut…
Q: ACT Inc. has a $1,000 (face value), 20 year bond issue selling for $1,229.40 that pays an annual…
A: 1. What would be BAT's current before-tax component cost of debt It can be calculated using rate…
Q: Gina Electronics Inc. has long-term bonds with a face value of $2M, the coupon rate on the bonds is…
A: Weighted average cost of capital is total cost of raising funds for the business and it includes…
Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…
A: Here, To Find: After-tax cost of the company's debt =?
Q: Butler, Inc., has a target debt-equity ratio of 1.60. Its WACC is 7.8 percent, and the tax rate is…
A: WACC = Post tax Cost of debt * Weight of debt + Cost of equity * Weight of equity
Q: LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 5.7%. LL…
A: Debt is an obligation for the company for which an interest has to be paid by the company.
Q: Kountry Kitchen has a cost of equity of 12.5 percent, a pretax cost of debt of 5.8 percent, and the…
A: Cost of equity, Ke = 125%,Pretax cost of debt, Kd = 5.8%Tax rate, T = 35%WACC = 9.16%Let's assume…
Q: A company has $5 million in debt outstanding with a coupon rate of 12%. Currently, the yield to…
A: Bonds are the debt obligations of a business on which it requires to pay regular interest to the…
Q: Fama’s Llamas has a weighted average cost of capital of 8.4 percent. The company’s cost of equity is…
A: The formula used is shown:
Q: ACT Inc. has a $1,000 (face value), 30 year bond issue selling for $838.88 that pays an annual…
A: Cost of Debt: It is the rate of return that is paid by companies on its debt obligations. These debt…
Q: Need help with both questions
A: Calculate the cost of debt as follows:
Q: a firm has a debt-to-equity ratio of 1.0. if we assume that the firm's debt pays 11% interest…
A: Hence, cost of debt after tax is 6.6%.The cost of debt is determined by multiplying cost of debt…
Q: The coupon rate on a debt issue is 6%. If the yield to maturity on the debt is 9%, what is the…
A: Given, Coupon rate on debt = 6% Yield to maturity on debt = 9% Tax rate = 34% = 0.34 From these…
Q: Laurel, Inc., has debt outstanding with a coupon rate of 6.0% and a yield to maturity of 7.0%. Its…
A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…
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- If the cost of debt for Oman cement is 8.15% (effective rate) and its tax rate is 24% then what is the after tax cost of debt? Select one: a. 61.9% b. None c. 6.10% d. 6.19% e. 0.619%Outstanding debt of Home Depot trades with a yield to maturity of 6%.The tax rate of Home Depot is 30%.What is the effective cost of debt of Home Depot? A. 5.25% B. 4.2% C. 5.04% D. 4.62%The cost of debt for Salalah Mills is 15.25% (effective rate) and its tax rate is 30.05% then what is the after tax cost of debt? Select one: O a. 10.66% O b. 12.50% O c. 10% d. None е. 10.60%
- Outstanding debt of Home Depot trades with a yield to maturity of 8%. The tax rate of Home Depot is 30%. What is the effective cost of debt of Home Depot?Coco Kitchen has a WACC of 14%. It has 19% of return on equity, and 60% of debt-to-asset ratio (i.e., weight on debt). Assume tax equals 0, calculate the interest rate on the debt. O 9.90% O 11.14% O 10.67% O 6.50%The yield to maturity is 10%. The.corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds? O 5.28% O 248% O 6.90% O 3.14%
- K The outstanding debt of Berstin Corp. has eight years to maturity, a current yield of 9%, and a price of $80. What is the pretax cost of debt if the tax rate is 30%. A. 7.5% B. 10.8 % OC. 6.5 % OD. more information neededHarmony Sego has a tax rate of 21%, the interest rate on debt is 10%, and the WACC is 15%. If the debt ratio is 60% (i.e., the weight on debt), what is the expected rate of return to equity holders? O 12.50% O 22.50% O 25.65% O 21.25%The yield to maturity on SodaFizz’s debt is 7.2%. If the company’s marginal tax rate is 21%, what is SodaFizz’s effective cost of debt?
- Home Depot has debt outstanding with a face value of $30 billion. The coupon rate on these bonds is 6.2%. The current yield-to-maturity (YTM) on these bonds is 7.8%. Home Depot's tax rate is 26%. What is the effective cost of debt of Home Depot? OA. 9.83% OB. 6.20% OC. 4.59% OD. 5.77% OE. 7.80%Viserion, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 28 years to maturity that is quoted at 106 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. What is the company's pretax cost of debt? multiple choice 1 5.57% 6.69% 4.24% 6.13% 5.02% If the tax rate is 24 percent, what is the aftertax cost of debt? multiple choice 2 4.24% 3.81% 4.66% 5.93% 5.57%The following data pertains to Xena Corp. Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.2% Common Equity: Book Value $5,535 Market Value $23,247 Marginal Income Tax Rate 19% Market Beta 1.64 A. Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital: B. Using the information from the table, determine the weight on equity capital that should be used to calculate Xena's weighted-average cost of capital.