Meyer of Georgia wants to issue bonds to pay to make electric Avenue higher the current interest rate on corporate bonds with the same credit risk is 8% and the take rate is 25% than Georgia can issue bonds playing what percent?
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Meyer of Georgia wants to issue bonds to pay to make electric Avenue higher the current interest rate on corporate bonds with the same credit risk is 8% and the take rate is 25% than Georgia can issue bonds playing what percent?
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- An investor is comparing the following two bonds: a bond from ABC Corp which pays an interest rate of 9 percent per year and a municipal bond which pays an interest rate of 7.9 percent per year. The investor is in the 22 percent tax bracket. Which bond will give the investor a higher after-tax interest rate and for which reason? a. The ABC bond because it pays a 9 percent interest rate, while the municipal bond only pays 7.9 percent. b. None of these is correct. c. The ABC bond because it pays an equivalent after-tax rate of 11.5 percent, while the municipal bond pays out an equivalent after-tax rate of 10.1 percent. d. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an after-tax 7.02 percent interest rate. e. The municipal bond because it pays an equivalent after-tax rate of 7.9 percent, while the ABC bond pays out an equivalent after-tax rate of 2.0 percent.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…1. Suppose the state of Indiana issued a tax-exempt bond to pay for student fees in its universities. The bond currently has a yield of 0.8 percent. 2. Suppose Mike is paying a marginal tax rate of 20% and Peter is paying a marginal tax rate of 30%. Calculate the equivalent taxable yields of this bond to both Mike and Peter. Mike: 0.8/(1-.2)=1 Peter: 0.8/(1-.3)= 2.67 3. Suppose that the yield on a Baa-rated corporate bond, a bond with the same credit rating as the state of Indiana, is 1.4 percent. Calculate the yield ratio between the tax-exempt bond vs the taxable bond, and briefly interpret what the yield ratio implies.
- California Resource Corporation has a bond outstanding with a coupon interest rate of 6 percent that will mature in 7 years. The investors who have purchased the bonds are requiring a rate of return of 11.41 percent! Compute the value of the bonds for the current investors. Earning a 11.41 percent rate of return is fantastic-sure beats government Treasury bond rates. So why would many investors choose not to invest in these bonds unless they can receive a really high rate of return for bonds?A corporate bond has a face value of $1,000 and a coupon rate of 5%. The bond matures in 15 years and has a current market price of $925. 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? Select one: a. 3.74% b. 4.45% c. 5.29% d. 6.78% . Please show how you got your answer. Thank youYing Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. If the corporate tax rate is 34 percent, what is the aftertax cost of Ying's debt? Bond Coupon Rate Price Quote Maturity Face Value 1 6.4% 100 3 years $ 18,000,000 2 7.4 107 6 years 39,000,000 3 6.7 97 19 years 46,000,000 4 7.8 107 31 years 64,000,000
- Corral Industries has decided to borrow money by issuing perpetual bonds with a coupon rate of 8.5 percent, payable annually. The one-year interest rate is 8.5 percent. Next year, there is a 40 percent probability that interest rates will increase to 10 percent, and there is a 60 percent probability that they will fall to 6 percent. If the company decides instead to make the bonds callable in one year, what coupon will be demanded by the bondholders for the bonds to sell at par? Assume that the bonds will be called if interest rates fall and that the call premium is equal to the annual coupon. a) 8.12% b) 8.77% c) 8.59% d) 8.35%corporate 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%ou have just purchased a long term government bond for $1200 and a short term government bond for $1100. If there is an increase in the market yield, the price of the long-term bond will be ________ than $1200 and that of short-term bond will be________ than $1100
- (A) a Bank-backed municipal bond has yield of 10% with maturity of 18 years. Calculate its Yield ratio with this given table Name Maturity Yield Insured Municipal Bond 10 Years 7% Government Sukuk 12 years 6% Government Bond Series-19 15 Years 7% Government Bond Series-20 18 years 8% Government Bond Series-21 20 Years 9% (B) If the municipal government issues another bond with tax-backed scheme, what is the different of this tax-backed and bank-backed bond? (A) Suppose that the price of Malaysia T-Bills with 90 days to maturity and a $1 million face value is $960,000. What is the yield on a bank discount basis? (B) If the Cambodia treasury bill has 15% yield with 90 days to maturity, which T-Bill has better risk-reward? Why? (C) If the Vietnam T-Bill has 10% yield with 30 days to maturity, which T-Bill has better risk-reward? Why?Williams Industries has decided to borrow money by issuing perpetual bonds with a coupon rate of 6.5%, payable annually, and a par value of $1,000. The 1-year interest rate is 6.5%. Next year, there is a 35% probability that interest rates will increase to 8% and a 65% probability that they will fall to 5%. If the company decides instead to make the bonds callable in one year, what coupon will be demanded by the bondholders for the bonds to sell at par? Assume that the bonds will be called if interest rates fall and that the call premium is equal to the annual coupon.Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the table below. Bond Coupon Rate Price Quote Maturity Face Value 1 8.90% 105.9 3 years $ 29,000,000 2 6.40 94.5 6 years 49,000,000 3 8.60 104.7 13.5 years 54,000,000 4 9.10 94.5 23 years 69,000,000 If the corporate tax rate is 24 percent, what is the aftertax cost of the company’s debt?