Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 18 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. What is the company's pretax cost of debt? If the tax rate is 35 percent, what is the aftertax cost of debt? Settlement Maturity Price (% of par) Coupon rate Payments per year Tax rate Pretax cost 01/01/00 01/01/18 Aftertax cost of debt 107 Complete the following analysis. Do not hard code values in your calculations. 6% 2 35% 5.39%
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- FIXY has assets of $2 million invested in a 25-year, 6 percent annual coupon Treasury bond selling at par. The assets are financed with equity and a $ 1700000, 4-year, 3 percent annual coupon capital note selling at par. What is the leverage adjusted duration gap of FIXY? What is the impact on equity value if the relative change in all market interest rates is AR/(1+R /2)=0.003?b) Country Markets has an unlevered cost of capital of 12 percent, a taxrate of 38 percent, and expected earnings before interest and taxesof $15,700. The company has $12,000 in bonds outstanding that have aISSUED BY THE CI, MGMT3048 ON JUNE 11, 2023 36 percent coupon and pay interest annually. The bonds are selling atpar value. What is the cost of equity?CALCULATE WACC BASED ON THE FOLLOWING FIGURES: Bonds $35,000,000 (35%) Preferred Stock $15,000,000 (15%) Common Equity $50,000,000 (50%) Total $100,000,000 Data to be used in the calculation of the cost of debt: Par value = $1,000, non-callable Market value = $1,085.59 Coupon interest = 6%, annual payments Remaining maturity = 20 years New bonds can be privately placed without any flotation costs Data to be used in the calculation of the cost of preferred stock: Par value = $100 Annual dividend = 7.5% of par Market value = $102 Flotation cost = 4% Data to be used in the calculation of the cost of common equity: CAPM data: VEC’s beta = 1.2 The yield on T-bonds = 3% Market risk premium = 7% DCF data: Stock price = $27.08 Last year’s dividend (D0) = $2.10 Expected dividend growth rate = 4% Bond-yield-plus-risk-premium data: Risk premium = 5.5% Amount of retained…
- Michalleti Marketing Consulting Ltd issued Gh¢500million of zero-coupon bonds with ex-interest of Gh¢120, due for repayment in 5years time at par. Its current market price is Gh¢105. What is the company’s cost of debt capital? plZ help me sir urgentlyA firm has two classes of securities: long-term bonds and common stock. The bonds have 16 years to maturity, a coupon rate of 5%, semi-annual coupon payments, a yield-to-maturity of 8.6%, and $749 million of total par value. The stock has 31 million shares outstanding and a current market price of $26. When computing the WACC, what weight should the firm assign to its cost of debt? Enter your answer as a decimal and show two decimal places.Pacific Filght PLC has in issue K500,000 10% irredeemable debentures. Investors currently require 8% return per annum. What will be the market value of the debt?
- Suppose that LilyMac Photography expects EBIT to be approximately $46,000 per year for the foreseeable future, and that it has 500 10-year, 5 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?PDQ, Inc. expects EBIT to be approximately $12.2 million per year for the foreseeable future, and it has 100,000 20-year, 6 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.)Augustine Company's stock has 47 million shares outstanding and a current market price of $50. Its bonds have $245 million of total par value, 19 years to maturity, a coupon rate of 4%, semi-annual coupon payments, and yield-to-maturity of 5.6%. The firm has no other classes of securities. When computing the WACC, what weight should the firm assign to its cost of debt? Enter your answer as a decimal and show two decimal places.
- 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)IN EXCEL! Assume you would like to estimate ABC Company's debt cost. ABC's bond has a semi-annual 5.25 % coupon rate and a Par value of $1,000, with a market price of 86 percent of the Par. Assume a number of years to maturity of 12 years. Estimate the cost of debt for ABC Company. Assume the same number of years to maturity of Question 1. You buy a zero-coupon to reach your goal of having $1,000,000.00 when the zero-Coupon bond matures. The yield of this Zero-Coupon bond is 6.25% compounded semiannually, how much must you invest today to achieve your goal? The face value of each zero-coupon bond is $10,000. IN EXCELUse the following information: Debt: $79,000,000 book value outstanding. The debt is trading at 94% of book value. The yield to maturity is 7%. Equity: 2,900,000 shares selling at $46 per share. Assume the expected rate of return on Federated’s stock is 16%. Taxes: Federated’s marginal tax rate is Tc = 0.21. Suppose Federated Junkyards decides to move to a more conservative debt policy. A year later, its debt ratio is down to 14.00% (D/V = 0.1400). The interest rate has dropped to 6.6%. The company’s business risk, opportunity cost of capital, and tax rate have not changed.Use the three-step procedure to calculate Federated’s WACC under these new assumptions. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)