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Kenny Electric Company's bonds were issued several years ago and now have 20 years to maturity. These bonds have a 10% YTM and has a par value of $1,000. Company’s
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- Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually and warrants attached. These bonds are currently trading for $1,000. Neubert also has outstanding $1,000 par value 15-year straight debt with a 7% coupon paid annually, also trading for $1,000. What is the implied value of the warrants attached to each bond?Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the market rate of interest was 5%. If the bonds sold at 102.438, how much cash did Williams Sisters Inc. receive from issuing the bonds?Gingko Inc. issued bonds with a face value of $100,000, a rate of 7%, and a 10-yearterm for $103,000. From this information, we know that the market rate of interest was ________. A. more than 7% B. less than 7% C. equal to 7% D. equal to 1.3%
- On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.Kenny Electric Company's bonds were issued several years ago and now have 20 years to maturity. These bonds have a 15% YTM and sells at a price of $1,075. Company’s cost of common equity is 15% and cost of preferred equity is 12%. Currently company is financed with 20% debt, 50% common equity and 30% preferred equity. Tax rate is 40%. Calculate WACC?Several years ago, the ABC Company sold a $1,000 par value bond that now has 15 years to maturity and a 6.50% annual coupon that is paid semiannually. The bond currently sells for $980 and the company's tax rate is 35%. What is the after-tax cost of debt
- A company issued a 30-year, 6 percent semiannual bond three years ago. The bond currently sells for 93 percent of its face value. The book value of the debt issue is $95 million. In addition, the company has a second debt issue on the market, a zero-coupon bond with eight years left to maturity; the book value of this issue is $40 million, and the bonds sell for 67 percent of par. The company’s tax rate is 22 percent. What is the best estimate of the aftertax cost of debt?Luther Industries has 25 million shares of common stock outstanding, trading at $18 per share. In addition, Luther has bonds with a total face value of $150 million. The bonds have 20 years to maturity, semi-annual coupon payments, an annual coupon rate of 7.5%, and each bond has a market price of $570. If Luther has a corporate tax rate of 21%, what is their effective (or "after-tax") cost of debt?Nevada Mining Co. has only long term debt of $600. This debt consist of long term bond which has following features: face value is $1000, time to maturity is 40 years, and annual coupon rate is 0.13. These bond is currently traded in the market at a price of $1,505. Regarding the equity, the current stock price of the shares are $59 and the firms has 13 shares outstanding. Nevada Mining Co. is planning to distribute $11 dividend per share and these dividends are expected to grow 0.06 each year. If the tax rate of Nevada Mining Co. is 0.40, calculate the WACC. Show your steps in your calculations. Please answer in detail use formulae step by step answer
