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You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 7.50 percent semiannual coupon bonds are selling at a price of $1,000.00. These bonds are the only debt outstanding for the firm
- What is the current YTM of the bonds?
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- Suppose the Schoof Company has this book value balance sheet: The notes payable are to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the companys permanent capital structure. The long-term debt consists of 30,000 bonds, each with a par value of 1,000, an annual coupon interest rate of 6%, and a 20-year maturity. The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of 60 per share. Calculate the firms market value capital structure.You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 13.00 percent semiannual coupon bonds are selling at a price of $1,207. These bonds are the only debt outstanding for the firm. What is the current YTM of the bonds? (to 2 decimal places) What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? What is the current YTM of the bonds and after-tax cost of debt for this firm if the bonds are selling at par? (round final answer to 2 decimal places) YTM __% After-tax cost of debt ___%You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 13.00 percent semiannual coupon bonds are selling at a price of $1,207. These bonds are the only debt outstanding for the firm. What is the current YTM of the bonds? (to 2 decimal places) What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent?
- You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 7.50 percent semiannual coupon bonds are selling at a price of $1,000.00. These bonds are the only debt outstanding for the firm. - What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent?A company has outstanding 20-year noncallable bonds with a face value of $1,000,an 11% annual coupon, and a market price of $1,294.54. If the company was to issuenew debt, what would be a reasonable estimate of the interest rate on that debt? Ifthe company’s tax rate is 40%, what is its after-tax cost of debt?A company currently has a bond outstanding that pays 6% coupon rate (coupons paid semiannually), a $1,000 par value and matures in 30 years. The bond is currently trading at $515.16. The company's tax rate is 25%. What is the firm's after-tax component cost of debt for purposes of calculating the weighted average cost of capital ("WACC")? Please show formulas, step by step instructions (without a financial calculator or Excel)
- Consider a firm whose debt has a market value of $35 million and whose stock has a market value of $55 million. The firm pays a 7 percent rate of interest on its new debt and has a beta of 1.23. The corporate tax rate is 21%. Assume that the security market line holds, that the risk premium on the market is 10.5 percent, and that the current Treasury bill is rate is 1 percent. Using the pretax cost of debt from Question 7, what is the cost of equity, RS?To help finance a major expansion, a company sold a noncallable bond several years ago that now has 15 years to maturity. This bond has a 5% annual coupon, paid semiannually, it sells at a price of $985, and it has a par value of $1,000. If the company’s tax rate is 28%, what component cost of debt should be used in the WACC calculation?You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 8.6 percent coupon bonds are selling at a price of $849.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. What is the current YTM of the bonds? (round intermediate calculations to 4 decimal places, and final answer to 0 decimal places) What is the after-tax cost of debt for this firm if it has a 30 percent marginal and average tax rate? (Round final answer to 2 decimal places, e.g. 15.25%.)
- To help finance a major expansion, ABC Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has a 9.25% annual coupon, paid semiannually, sells at a price of $875, and has a par value of $1,000. If the firm's tax rate is 35%, what is the after-tax cost of debt for use in the WACC calculation?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 percent?To help finance a major expansion, a company sold a noncallable bond several years ago that now has 14 years to maturity. This bond has a 14.00% annual coupon, paid semiannually, sells at a price of $1,400, and has a par value of $1,000. If the firm's tax rate is 21%, what is the component cost of debt for use in the WACC calculation? Do not round your intermediate calculations. 8.94% 7.06% 3.53%
