Brown Industries can sell 15 years, $1000 par value bonds paying annual interest at 12% coupon rate.  The bonds can be sold for $1000 each, the flotation cost of $30 per bond will be incurred in this process.  The firm is in the 40% tax bracket.   i)             Compute the before tax cost of debt.

Q: Brown Industries can sell 15 years, $1000 par value bonds paying annual interest at 12% coupon rate.…

A: The calculation is:

Q: KatyDid Clothes has a $130 million (face value) 20-year bond issue selling for 102 percent of par…

A: FV = 130 N  = 40 (20*2) PV = 132.60 (130*102%) Pmt = 6.50 (130*10%/2)

Q: Octopus Transit has a $1,000 par value bond outstanding with 10 years to maturity. The bond carries…

A: Par value of bond = $ 1000 Annual coupon amount = $ 104 Semi annual coupon payment = 104/2 = $ 52…

Q: Scherr Enterprises has a series of 7 percent coupon bonds outstanding with a $1,000 par value. The…

A: Face value = $1000 Coupon = 7% of $1000 = $70 Duration till maturity (n) = 10 years Bond price =…

Q: Olympic Sports has two issues of debt outstanding. One is an 8% coupon bond with a face value of $21…

A: The conceptual formula used:

Q: Five years ago, ABC Firms issued $1,000 par value bonds with a 12% coupon rate and an original…

A: Following Formula will be used:

Q: The Maximus Corporation is considering a new investment which would be financed from debt. Maximus…

A: Par value = $ 1000 Coupon rate = 10% Coupon amount = 1000*0.10 = $ 100 Years to maturity = 13 Years…

Q: Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity…

A:

Q: Estimate Dixon's marginal pre-tax cost of debt.

A: Yield to Maturity refers to the rate of interest earned till the maturity of the bond by the bond…

Q: Olympic Sports has two issues of debt outstanding. One is an 8% coupon bond with a face value of $24…

A: Given:  Option 1:Face Value  =  $24 millionCoupon Rate  =  8%Years to Maturity  =  15 yearsYield to…

Q: Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with…

A: Debt maturity = 16 years  Present Value = 105% of face value = 1000*105% = $1050 Coupon = 10% Coupon…

Q: Olympic Sports has two issues of debt outstanding. One is a 6% coupon bond with a face value of $39…

A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…

Q: Oberon, Inc. has a $20 million (face value) 10-year bond issue selling for 97 percent of par that…

A: The before tax cost of debt is calculated as bond YTM which can be estimated from the RATE function…

Q: Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $37…

A: Yield to maturity refers to the internal rate of return which is earned by the investor who makes…

Q: Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $26…

A: Here, Tax Rate is 35% Details of First Bond is as follows: Coupon Rate is 7% Face Value (Maturity…

Q: Suppose a company will issue new 20-year debt with a par value of $1,000and a coupon rate of 9%,…

A: The cost of debt is the profit a business offers its debtors and creditors. These capital suppliers…

Q: Galvatron Metals has a bond outstanding with a coupon rate of 6.4 percent and semiannual payments.…

A: Cost of Debt = ( Interest Amount ( 1 -  t ) +  Face  Value Of Bond - Market  Value  of bond /…

Q: ​Currently, Warren Industries can sell 20-year​, ​$1,000​-par-value bonds paying annual interest at…

A: Issue price = $ 960 Flotation cost = $ 35 Tax rate = 22% Par value = $ 1000 Coupon rate = 14% Coupon…

Q: U.S. Delay Corporation, a subsidiary of the postal service, must decide whether to issue zero coupon…

A: Given that:Face value is $1000Present value is $795.54Coupon rate is 4.5%

Q: Several years ago, the ABC Company sold a $1,000 par value bond that now has 15 years to maturity…

A: The cost of raising the funds through borrowing or the financing cost is termed as the required rate…

Q: A company needs to raise $20 million and is considering issuing 5-year bonds for this purpose.…

A: The bonds are redeemed at their par-value with regular coupon payments but when bonds are not…

Q: Suppose a company will issue new 20-year debt with a par value of $1,000 and a coupon rate of 9%,…

A: Cost of debt is similer to the yield of bond issue which is given by, Y = (I + ( F - NP)/n)/((F +…

Q: Today Melton Corporation's bonds sold for $1087.50.  If the bond's annual coupon payment a is $75.00…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

Q: LLC International is issuing a $2,000 par value bond that pays 8 percent annual interest and matures…

A: Given, Face value =$2000 Years =10 Coupon rate =8% price =$1800 using excel rate function to…

Q: To finance a new line of product, Larissa Toys has issued a bond with a par value of $1,000, coupon…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Carraway Seed Company is issuing a $1,000 par value bond that pays 7 percent annual interest and…

A: The cost of raising the funds through borrowing or the financing cost is termed as the required rate…

Q: The H-mart’s currently outstanding  6 percent annual coupon bonds have maturity of 20 years with par…

A: Annual coupon rate is 6% Maturity is 20 years Par value is $1,000 Current price of bond is $850 Tax…

Q: e investment manager for Draxler Co. pays $988,472 to purchase a $1,000,000 face-value bond maturing…

A: Bond is that debt instrument which is used by the organization to finance its long term fund needs,…

Q: Airborne Airlines Inc. has a $1,000 par value bond outstanding with 30 years to maturity. The bond…

A: Given:

Q: Joliet Company is planning to issue $1,000 par value bonds that have a coupon rate of 9.6%.  The…

A: using financial calculator, N= no. of periods  N= 15*2 = 30 PMT = coupon payment PMT = 1000*9.6%/2 =…

Q: Enterprise, Inc. bonds have an annual coupon rate of 9 percent. The interest is paid semiannually…

A: Price of bond is the present value of coupon payment and present value of par value of bond taken on…

Q: Sugondese Hardwood Polishing needs to raise additional debt capital in order to expand its services…

A: Computation:

Q: Global Products plans to issue long-term bonds to raise funds to finance its growth. The company has…

A: After tax cost of debt = before tax cost of debt * (1-taxrate) Before tax cost of debt = YTM…

Q: The Virginia Corporation recently issued 10-year bonds at a price of $1,000.  These bonds pay $60 in…

A: Please note that the face value of the bonds have not been specified. We therefore make the…

Q: Georga's Restaurants has 7,000 bonds outstanding with a face value of $1,000 each, a market price of…

A: Interest  Tax Shield : It is the tax benefit  or tax savings on interest payment on loan or debt…

Q: Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $30…

A: In this question we need to calculate the before-tax cost of debt for Olympic and Olympic's…

Q: Luther Industries needs to raise $25 million to fund a new office complex. The company plans on…

A: Bond price refers to the right price of bond which is also called as intrinsic value of bond. Bond…

Q: Olympic Sports has two issues of debt outstanding. One is a 5% coupon bond with a face value of $33…

A: Cost of debt is the rate at which the firm procures the debt from external source of finance. The…

Q: Compute the yield to maturity on the old issue and use this as the yield for the new issue. Yield…

A: Yield to Maturity: It is the minimum rate for the bondholder to invest in the company (issuer). The…

Q: Russell Container Corporation has a $1,000 par value bond outstanding with 30 years to maturity. The…

A: Yield to maturity is the rate of return that an investor may expect from its investment in bond if…

Q: Brown Industries can sell 15 years, $1000 par value bonds paying annual interest at 12% coupon rate.…

A: The calculation of net proceeds:

Q: Olympic Sports has two issues of debt outstanding. One is a 4% coupon bond with a face value of $34…

A: Let par value of bond =100 Coupon =4%=4 YEILD to MATURITY =5% Years to MATURITY =15 Present value…

Q: Sun company has outstanding a 10 percent bond issue with a face of $1,000 per bond and three years…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The company wants to sell a Php 69,000,000 worth of bonds with a maturity of 25 years. The coupon…

A: Face Value = Php1,050 Selling Price = Php 975 Cost of Selling = Php 20 Coupon Rate = 9.5% Time…

Q: Carraway Seed Company is issuing a $1,000 par value bond that pays 8 percent annual interest and…

A: Cost of debt is the total expense incurred while raising funds through debt instruments. It includes…

Q: firm’s

A: Introduction: The after tax cost of debt is nothing but yield to maturity. Yeild to maturity is…

Q: Dixon Corp has 6% coupon bonds outstanding that have a remaining maturity of 12 years. These bonds…

A: Given: Coupon rate = 6% Years to maturity = 12 years Current price = $1,080 Face value = $1,000 Tax…

Q: Red Oyster Seafood Company can issue a 30-year debt security that pays an annual coupon payment of…

A: Given: Particulars   Years 30 Coupon amount(PMT) $100 Par value(FV) $1,000 Tax rate 35%