The following is the information on debt issued by Huntington Power Co. Calculate the after-tax cost of debt for the firm. Debt: 4 percent coupon paid semiannually, $1,000 par value, 15 years to maturity, current market price of the bond is $889.0. Tax rate is 20%.

Q: The company owner contributes 100,000, which is invested in a twenty-year bond with a 5% coupon paid…

A: The accounting treatment for each category is as follows: Note: Initial recognition is done on a…

Q: Neptune Corporation's bonds have 20-years to maturity and a coupon rate of 8.5%. Interest is paid…

A: Bonds are debt instruments that are issued by entities to raise funds and meet their capital…

Q: C. XY Ltd has bonds outstanding with 7 years left before maturity. The bonds are currently selling…

A: Yield to maturity refers to the internal rate of return which is earned by the investor who makes…

Q: Scherr Enterprises has a series of 7 percent coupon bonds outstanding with a $1,000 par value. The…

A: Face value = $1000 Coupon = 7% of $1000 = $70 Duration till maturity (n) = 10 years Bond price =…

Q: CG Forest and Paper LTD. raises capital; by selling 5,000,000 worth of debt with flotation xost…

A: Yield to maturity: It can be defined as the aggregated return estimated on a bond if the bond is…

Q: (Cost of debt) Carraway Seed Company is issuing a $1,000 par value bond that pays 8 percent annual…

A: to find the after tax cost of debt, we will use the following formula Kd = [(I/P(1-F)] (1-T) Where,…

Q: Severalyears ago, the ABC Company sold a $1,000 par value bond that now has 15 yearsto maturity and…

A: The after-tax cost of debt is the interest paid on debt less any income tax savings due to…

Q: St. Thomas Company is planning to issue $1,000 par value bonds.  The bonds will have a coupon rate…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: Jimiax's Cricket Farm issued a 15 year, 4percent semiannual coupon bond 2 years ago. The bond…

A: Part (a): Calculation of company’s pre-tax cost of debt: Answer: Company’s pre-tax cost of debt is…

Q: At the present time, Water and Power Company (WPC) has 20-year noncallable bonds with a face value…

A: Yield to maturity (YTM) is also known as yield till maturity, and it refers to the return of the…

Q: Estimate Dixon's marginal pre-tax cost of debt.

A: Yield to Maturity refers to the rate of interest earned till the maturity of the bond by the bond…

Q: Oberon, Inc. has a $20 million (face value) 10-year bond issue selling for 97 percent of par that…

A: The before tax cost of debt is calculated as bond YTM which can be estimated from the RATE function…

Q: Boulder Furniture has bonds outstanding that mature in 13 years, have a 6 percent coupon, and pay…

A: Calculation of Yield to Maturity:Excel Spreadsheet:

Q: Micro

A: Micro Advantage’s weighted-average cost of capital (WACC) is 14.96%.  Please see the attached…

Q: ICU Window, inc, is trying to determine its cost of debt. The firm has a debt issue outstanding with…

A: The computations as follows: Hence, the pre-tax cost of debt and after-tax cost of debt are 2.69%…

Q: Tetra Inc. has 5% coupon bonds outstanding that have a remaining maturity of 9 years.  These bonds…

A: Working note:

Q: Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond currently…

A: since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Several years ago, the ABC Company sold a $1,000 par value bond that now has 15 years to maturity…

A: The cost of raising the funds through borrowing or the financing cost is termed as the required rate…

Q: The company has a P1,000 par value bond outstanding with 25 years to maturity. The bond carries an…

A: Annual interest payment = P88 Maturity value = P1,000 Tax rate = 0.30 Current price = P925 Maturity…

Q: Cote Import has several bond issues outstanding, each making semiannual interest payments. The bonds…

A: Using excel RATE function

Q: Madoff Corporation raised money through a bond issue with a total principal value of $3,000,000.…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: Simple Foods has a zero coupon bond issue outstanding that matures at nine years. The bonds are…

A: The company has a zero coupon bond that matures in 9 years with semiannual compounding.Par Value…

Q: Suppose a company will issue new 20-year debt with a par value of $1,000 and a coupon rate of 9%,…

A: Cost of debt is similer to the yield of bond issue which is given by, Y = (I + ( F - NP)/n)/((F +…

Q: 5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,550 face value…

A: Pre tax cost of debt is yield to maturity of the bond we deduct tax from cost of debt because…

Q: XYZ Company has bonds outstanding with 7 years left before maturity. The bonds are currently selling…

A: The effective interest rate that a corporation pays on its obligations, such as bonds and loans, is…

Q: Carraway Seed Company is issuing a $1,000 par value bond that pays 7 percent annual interest and…

A: The cost of raising the funds through borrowing or the financing cost is termed as the required rate…

Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…

A: Calculation of After-tax Cost of Debt:The after-tax cost of debt is 4.48%.Excel Spreadsheet:

Q: Lionel Company has 1,500 units of bonds outstanding. Each unit has $100 face value, 6% coupon rate…

A: Here, Units of Bond is 1,500 Face Value of Each Bond is $100 Coupon Rate is 6% Coupon Compounding…

Q: Joliet Company is planning to issue $1,000 par value bonds that have a coupon rate of 9.6%.  The…

A: using financial calculator, N= no. of periods  N= 15*2 = 30 PMT = coupon payment PMT = 1000*9.6%/2 =…

Q: Blue Sky Corporation is planning to issue $1,000 par value bonds. The bonds will have a coupon rate…

A: Debt financing is considered in order to reduce the tax liability of the company. When the debt…

Q: Georga's Restaurants has 7,000 bonds outstanding with a face value of $1,000 each, a market price of…

A: Interest  Tax Shield : It is the tax benefit  or tax savings on interest payment on loan or debt…

Q: Charter Corp. issued 2,234 debentures with a $1,000 par value and 5% coupon rate. a. What dollar…

A:

Q: A company has issued 10-year bonds, with a face value of $1,000,000 in 1,000 dollar units. Interest…

A: A Bond is an instrument that represents the loan that is made by the investor to the company and…

Q: Oberon, Inc. has a $20 million (face value) 8-year bond issue selling for 99 percent of par that…

A: Face value = $20,000,000 Price = 99% Price in $ = 20,000,000*0.99 = $19,800,000 Coupon rate = 8.05%…

Q: (Cost of debt) Belton Distribution Company is issuing a $1,000 par value bond that pays 7.0 percent…

A: Par value = $ 1000 Coupon rate = 7% Semi annual coupon amount = 1000*0.07/2 = $ 35 Years to maturity…

Q: Melekom Berhad has 16 years to maturity bond with a RM1,000.00 par value. The bond pays RM7S.00 a…

A: Note: Here it is assumed that the Interest amount is RM75 per year and the selling price is RM550.…

Q: Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond currently…

A: Information Provided: Term = 30 years Coupon rate = 8% semi-annually 3 years ago Selling price = 93%…

Q: Galvatron Metals has a bond outstanding with a coupon rate of 6.1 percent and semiannual payments.…

A: The after-tax cost of debt is the interest paid on debt after deducting the saving on income tax due…

Q: Charter Corp. has issued 1,554 debentures with a total principal value of ​$1,554,000. The bonds…

A: A financial instrument with a fixed cost that helps a company to raise funds for business operations…

Q: A company has outstanding 20-year noncallable bonds with a face value of $1,000,an 11% annual…

A: Required rate of interest is the return provided by the bond. At required rate, the present value of…

Q: Carraway Seed Company is issuing a $1,000 par value bond that pays 8 percent annual interest and…

A: Cost of debt is the total expense incurred while raising funds through debt instruments. It includes…

Q: a The dollar amount of interest per bond an investor can expect to receive each year from Charter is…

A: Debentures are a long term debt security used largely by big corporates to issue debt funds offering…

Q: The 9 percent annual coupon bonds of the Jamesway Co. are selling for $1,008.20. The bonds have a…

A: The cost of raising the funds through borrowing or the financing cost is termed as the required rate…

Q: firm’s

A: Introduction: The after tax cost of debt is nothing but yield to maturity. Yeild to maturity is…

Q: Red Oyster Seafood Company can issue a 30-year debt security that pays an annual coupon payment of…

A: Given: Particulars   Years 30 Coupon amount(PMT) $100 Par value(FV) $1,000 Tax rate 35%