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- OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.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%BBB company has $54 million of current assets and $58 million of noncurrent assets. It forecastsan EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5%interest rate, and the company can issue long-term bonds at 7%. The company has set a targetdebt ratio of 45%. Required: A. For a maturity mix of 60% current and 40% long-term debt, prepare the company'sabbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company'sfinancial half of its income statement. C. Based on the financial statements above, calculate the return on equity ratio in order toevaluate the company's risk and return. D. Based on the financial statements above, calculate the current ratio in order to evaluatethe company's risk and return.
- ZZZ company has $27 million of current assets and $29 million of noncurrent assets. It forecasts an EBIT of $5.2 million and pays income taxes at a 21% rate. Short-term bank notes carry a 4% interest rate, and the company can issue long-term bonds at 7%. The company has set a target debt ratio of 45%. Required: A. For a maturity mix of 60% current and 40% long-term debt, prepare the company's abbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company's financial half of its income statement. C. Based on the financial statements above, calculate the (1) return on equity ratio and the (2) current ratio in order to evaluate the company's risk and return. I also would love to see the excel formulas pleaseUSAir has $54 million of current assets and $58 million of noncurrent assets. It forecastsan EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5%interest rate, and the company can issue long-term bonds at 7%. The company has set a targetdebt ratio of 45%. Required: I need assistance with Part D. Thanks for your help! A. For a maturity mix of 60% current and 40% long-term debt, prepare the company'sabbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company'sfinancial half of its income statement. C. Based on the financial statements above, calculate the return on equity ratio in order toevaluate the company's risk and return. D. Based on the financial statements above, calculate the current ratio in order to evaluatethe company's risk and return. Transcribed Image Text:A Current assets Noncurrent assets Total Assets Current liabilities Long-term liabilities Total debit Stockholders' equity Total…Hills Department Stores has $54 million of current assets and $58 million of noncurrent assets. It forecastsan EBIT of $10.4 million and pays income taxes at a 35% rate. Short-term bank notes carry a 5%interest rate, and the company can issue long-term bonds at 7%. The company has set a targetdebt ratio of 45%. Required: A. For a maturity mix of 60% current and 40% long-term debt, prepare the company'sabbreviated balance sheet. B. For a maturity mix of 60% current and 40% long-term debt, prepare the company'sfinancial half of its income statement. C. Based on the financial statements above, calculate the return on equity ratio in order toevaluate the company's risk and return. D. Based on the financial statements above, calculate the current ratio in order to evaluatethe company's risk and return. Please see attached spreadsheet and if you could please help me step by step by the information provided into the attached spreadsheet, I would be grateful.
- DIRECTIONS: Read and analyze the following problems and supply what is required and support it with necessary computations. 1. A company plans to issue a 25-year bond with a 12.5% interest rate, issued at a face value of P1, 000. The company is subject a 30% tax rate and expects a return on investment at 8%. Compute for the cost of debt issuance.Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 8 years to maturity twith a current price of $1042. The issue makes semiannual payments and has coupon rate of 8 percent. If the tax rate is 0.21, what is the pretax cost of debt? Enter the answer with 4 decimals (e.g. 0.0123)Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 8 years to maturity that is quoted at 103.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 5.2 percent annually. What is the company’s pretax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. If the tax rate is 21 percent, what is the aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
- 1. ABC will be issuing a 4% P20,000,000-face value bonds. The underwriter will be charging 2% of face value as its fee. ABC is taxed at 20%. How much is the effective cost of the bonds?If Intervale Railway invests $100,000 in 5% bonds at face value that the company intends to hold until the bond maturity date, the interest revenue recognized when each semiannual interest payment is received would be recorded as a a. credit to Cash, $2,500. b. credit to Interest Revenue, $2,500. c. debit to Long-term Investments—Held-to-Maturity, $2,500. d. debit to Dividend Revenue, $2,500.ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 12 years to maturity that is quoted at 111.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 8.4 percent annually. a. What is the company’s pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If the tax rate is 25 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
