Ying Import has several bond issues outstanding, each making semiannual interestpayments. The bonds are listed in the following table.CouponRateBondPrice QuoteMaturityFace Value2$45,000,00040,000,00050,000,00065,000,00014.00%103.185years6.10112.808 years15.5 years25 years35.30107.4544.90102.75If the corporate tax rate is 22 percent, what is the aftertax cost of the company's debt?(Do not round intermediate calculations and enter your answer as a percent roundedto 2 decimal places, e.g., 32.16.)Cost of debt% Lingenburger Cheese Corporation has 6.4 million shares of common stock outstanding,200,000 shares of 3.8 percent preferred stock outstanding, par value of $100, and120,000 bonds with a semiannual coupon of 4.8 percent outstanding, par value $1,000each. The common stock currently sells for $54 per share and has a beta of 1.08, thepreferred stock currently sells for $103 per share, and the bonds have 15 years tomaturity and sell for 107 percent of par. The market risk premium is 7.5 percent, T-billsare yielding 2.4 percent, and the company's tax rate is 22 percent.a. What is the firm's market value capital structure? (Do not round intermediatecalculations and round your answers to 4 decimal places, e.g., .1616.)b. If the company is evaluating a new investment project that has the same risk as thefirm's typical project, what rate should the firm use to discount the project's cashflows? (Do not round intermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)X Answer is complete but not entirely correct.a. Debt0.2599a. Equity0.0404 Xa. Preferred0.6995stockb. Discount rate8.38%

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Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. Coupon Rate Bond Price Quote Maturity Face Value 2$ 45,000,000 40,000,000 50,000,000 65,000,000 1 4.00% 103.18 5 years 2 6.10 112.80 8 years 15.5 years 25 years 3. 5.30 107.45 4 4.90 102.75 If the corporate tax rate is 22 percent, what is the aftertax cost of the company's debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.., 32.16.) Cost of debt %

Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. Coupon Rate Bond Price Quote Maturity Face Value 2$ 45,000,000 40,000,000 50,000,000 65,000,000 1 4.00% 103.18 5 years 2 6.10 112.80 8 years 15.5 years 25 years 3. 5.30 107.45 4 4.90 102.75 If the corporate tax rate is 22 percent, what is the aftertax cost of the company's debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.., 32.16.) Cost of debt %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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es Lingenburger Cheese Corporation has 6.6 million shares of common stock outstanding, 235,000 shares of 3.9 percent preferred stock outstanding, par value of $100; and 120,000 bonds with a semiannual coupon rate of 5.6 percent outstanding, par value $1,000 each. The common stock currently sells for $70 per share and has a beta of 1.10, the preferred stock has a par value of $100 and currently sells for $86 per share, and the bonds have 15 years to maturity and sell for 104 percent of par. The market risk premium is 7.4 percent, T-bills are yielding 3.4 percent, and the company's tax rate is 21 percent. a. What are the firm's market value capital structure weights? Note: Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616. b. If the company is evaluating a new investment project that has the same risk as the firm's typical project, what rate should the firm use to discount the project's cash flows? Note: Do not round intermediate calculations…
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