20. Debt issued by Kaspi Bank currently yields 9%. A municipal bond of equal risk currently yields 5%. At what marginal tax rate would an investor be indifferent between these two bonds? Jor 7% coupon rate. The bond is semiannual. It has 4 what is the price of bond?
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- 1)Lepus has issued bonds of $100 nominnal value with annual interest of 9%per year, based on the nominal value .the current market price of the bond is ¢90 what is the cost of the bond?calculate your answer. 2) Co XY has just just issued irredeemable debuntures with a face value of 100¢ and a coupon rate of 10% p.a .the debentures is now trading at 95¢ what is the cost of the debt if company tax is charged at 25%p.a. calculate your answerGeneral Electric has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 3%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 20 years. The market interest rate for similar bonds is 9%. a. By how much will the price of bond A fall if yields increase to 12% immediately? Answer: -35.6 b. By how much will the price of bond B fall if yields increase to 12% immediately (in absolute dollars)?Beckham Corporation has semiannual bonds outstanding with 15 years to maturity and the bonds are currently priced at $846.16. If the bonds have a coupon rate of 8.5 percent, then what is the after-tax cost of debt for Beckham if its marginal tax rate is 35%? 5.283% 6.868% 10.401% 7.655%
- ABC Company has a bond with two years to maturity, traded with a 2% spread over government treasury bond. The government treasury yield curve is given below. The coupon rate for the company bond is 5.0% and paid annually, face value; 100 AZN. What is the present value of this corporate bond? Maturity Yield % 1 year 5.0% 2 year 5.5% 3 year 6.0% 4 year 6.5% 5 year 7.0% 96.38 AZN 100 AZN 95.51 AZN 99.08 AZNcorporate bond has a face value of $1,000 and a coupon rate of 8.25%, paid annually. The bond matures in 15 years and has a current market price of $920 If the corporation sells more bonds it will incur flotation costs of $50per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? A. 7.11 % B. 6.4 % 5.28% D. 4.49%Suppose your company needs to raise $40.8 million and you want to issue 25-year bonds for this purpose. Assume the required return on your bond issue will be 5.8 percent, and you’re evaluating two issue alternatives: a 5.8 percent semiannual coupon bond and a zero coupon bond. Your company’s tax rate is 23 percent. a. How many of the coupon bonds would you need to issue to raise the $40.8 million? How many of the zeroes would you need to issue? (Do not round intermediate calculations. Round your coupon bond answer to the nearest whole number, e.g., 32 and your zero coupon bond answer to 2 decimals, e.g., 32.16.) b. In 25 years, what will your company’s repayment be if you issue the coupon bonds? What if you issue the zeroes? (Do not round intermediate calculations and enter your answers in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) c. Assume that the IRS amortization rules apply for the zero coupon bonds. Calculate the firm’s aftertax…
- . ABC Co. has $15 million of debt outstanding with a coupon rate of 9%. Currently, the yield to maturity on these bonds is 7%. If the firm’s tax rate is 35%, what is the after-tax cost of debt? A. 10.76% B. 5.85% C. 4.55% D. 5.40%A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 20 years and has a current market price of $900. If the corporation sells more bonds, it will incur flotation costs of $25 per bond. If the corporate tax rate is 35%, what is the after-tax cost of debt capital? a.5.29% b.4.45% c.3.81% d.6.78%LL Incorporated's currently outstanding 8% coupon bonds have a yield to maturity of 5.7%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is LL's after-tax cost of debt? Round your answer to two decimal places.
- 33. All treasury securities have a yield to maturity of 7 percent--so theyield curve is flat. If the yield to maturity on all Treasuries were todecline to 6 percent, which of the following bonds would have thelargest percentage increase in price?a. 15-year zero coupon Treasury bond.b. 12-year Treasury bond with a 10 percent annual coupon.c. 15-year Treasury bond with a 12 percent annual coupon.d. 2-year zero coupon Treasury bond.e. 2-year Treasury bond with a 15 percent annual coupon.26)PWCV, Inc. has bonds outstanding that mature in 6 years, pay interest annually, and have a coupon rate of 4.8 percent. These bonds have a face value of $1,000 and a current market price of $1,047.52. What is the company's aftertax cost of debt if its tax rate is 18 percent? Group of answer choices 3.2% 3.9% 4.1% 4.8%Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 16 percent to 6 percent. o. What is the bond price at 16 percent? Bond price |$ $. 64427 b. What is the bond price at 6 percent? c. What would be your percentage return on investment if you bought when rates were 16 percent and sold when rates were 6 percent? Note: Do not round intermediote colculotions. Input your onswer os o percent rounded to 2 decimel places. Return on irvestment $