Your firm has a bond issue with a face value of $500,000 outstanding. These bonds have a coupon rate of 6 percent, pay interest semiannually, and have a current market price equal to 95 percent of face value. What is the amount of the annual tax shield on debt given a tax rate of 21 percen

Suppose that you own a 1-year bond with a 10% coupon rate, a yield of 2%, and a face value of $1,000. Suppose further that you took out a 1-year loan of $900 at 2% (you lucky devil, you!) to help start your new food truck business. Calculate your net worth (assets minus liabilities) if all interest rates rise from 2% to 3%. ___________

Suppose that the yield to maturity of the 5% coupon, 25-year maturity bond falls to 7% by the end of the first year and that the investor sells the bond after the first year. If the investor's federal plus state tax rate on interest income is 30% and the combined tax rate on capital gains is 20%, what is the investor's after- tax rate of return?

Harbor Inc. wants to raise $80 million by issuing 10-year zero-coupon bonds at an annual interest rate of 5.4%. What should be the total face value of the bonds (in $ million)?

You just bought a bond (M=$1000, CR=10%, n=20 years, semiannual coupon pay yielding 10.5%. If you sell the bond one year from today when the yield is 9.75%, what would be your realized (actual) rate of return (before-tax)? 16.996%

You just bought a newly issued bond which has a face value of $1,000 and pays its coupon once annually. Its coupon rate is 6%, maturity is 20 years and the yield to maturity for the bond is currently 8%. Suppose that one year after you bought the bond, the yield to maturity of the bond declines to 7%. Find the (before-tax) total dollar return (dollar returns from the coupon payment and capital gains) for the one-year investment period.

Suppose your marginal federal income tax rate is 25 percent. 1. What is your after-tax return from holding a one-year corporate bond with a yield of 5.25 percent? (1 pt) 2. What is your after-tax return from a holding a one-year municipal bond with a yield of 4 percent? (1 pt) 3. How would you decide which bond to hold? (Assume that Both bonds carry the same risk.) (1 pt)

You are considering investing in a bond that matures 20 years from now (the par value of the bond is $1,000). It pays an annual end-of-year coupon rate of interest of 7.25 percent, or $72.5 per year. The bond currently sells for $900. Your marginal income tax rate (applied to interest payments) is 28 percent. Capital gains are taxed at the same rate as ordinary income. What is your after-tax rate of return if you buy this bond today and hold it until maturity? Use Table II and Table IV or a financial calculator to answer the question. Round your answer to the nearest whole number.

4. You bought a 10-year, 5% coupon bond for $1,000 and sold it 1 year later for $1,100. What is the rate of return on your investment if the bond pays interest annually? If your marginal tax rate is 30%, and 50% of capital gains are taxable, what is the after-tax rate of return on your bond investment?

The Holmes Company's currently outstanding bonds have a 10% coupon and a 13% yield to maturity. Holmes believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is Holmes' after-tax cost of debt? Round your answer to two decimal places.