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?

Q: Brown Industries can sell 15 years, $1000 par value bonds paying annual interest at 12% coupon rate.…

A: The calculation is:

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A: Bond valuation refers to a method which is used to compute the current value or present value (PV)…

Q: Brown Industries can sell 15 years, $1000 par value bonds paying annual interest at 12% coupon rate.…

A: Formulas:

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A: The question is based on the concept of Valuation of bonds.

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A: Information Provided: Par value = $1000 Term = 20 years Annual coupon rate = 7% semi-annually…

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: Five years ago, ABC Firms issued $1,000 par value bonds with a 12% coupon rate and an original…

A: Following Formula will be used:

Q: Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity…

A:

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…

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A: Given:  Option 1:Face Value  =  $24 millionCoupon Rate  =  8%Years to Maturity  =  15 yearsYield to…

Q: Olympic Sports has two issues of debt outstanding. One is a 6% coupon bond with a face value of $39…

A: Bonds: Bonds are the liabilities of the company which is issued to raise the funds required to…

Q: Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $26…

A: The question is based on the concept of calculation of cost of debt before tax and after tax .…

Q: Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $37…

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

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A: Calculation of Yield to Maturity:Excel Spreadsheet:

Q: ​Currently, Warren Industries can sell 20-year​, ​$1,000​-par-value bonds paying annual interest at…

A: Issue price = $ 960 Flotation cost = $ 35 Tax rate = 22% Par value = $ 1000 Coupon rate = 14% Coupon…

Q: Suppose your company needs to raise $15 million and you want to issue 6-year bonds for this purpose.…

A: Here, Note: As here nothing is given in the question regarding the par value of both the bond, we…

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A: Given that:Face value is $1000Present value is $795.54Coupon rate is 4.5%

Q: Orange Ltd is a AAA credit rating company and plans to raise new capital for its new project. The…

A: Number of bonds = 100 Time = 10 years  Face Value = $1000 Coupon rate = 10% Current price of bonds =…

Q: Russell Container Corporation has a RM1,000 par value bonds outstanding with 20 years to maturity.…

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Q: Today Melton Corporation's bonds sold for $1087.50.  If the bond's annual coupon payment a is $75.00…

A: A financial instrument that does not affect the ownership of the common shareholders or management…

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A: Cost of debt is yield to maturity on the bond and yield is calculated using rate function in excel

Q: Five years ago, Sportify Inc. issued a 20-year bond with an annual coupon rate of 12% to finance its…

A: The Net Present Value: The Net Present Value is a technique that is used to assess the viability of…

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Q: Company B has $50 million of bonds outstanding (face value).  These are 10-year bonds, and they are…

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

Q: Universal Manufactoring plans to issue long-term bonds to raise funds to support future expansion.…

A: Here, To Find: Part A. Annual Coupon rate of the new bonds =? Part B. After-tax cost of debt =?

Q: Orange Ltd is a AAA credit rating company and plans to raise new capital for its new project. The…

A: Weighted Average Cost of Capital refers to the financial ratio that calculates the overall cost of…

Q: Global Products plans to issue long-term bonds to raise funds to finance its growth. The company has…

A: After tax cost of debt = before tax cost of debt * (1-taxrate) Before tax cost of debt = YTM…

Q: Allied Materials needs $8 million in new capital for expanded compositesmanufacturing. It is…

A: Face Value = 1000 Price = 800 Semi Annual periods hence time period will be multiplied by 2 and…

Q: Several years ago a company sold a $1,000 par value, noncallable bond that now has 20 years to…

A: The cost of debt can be solved with help of Rate Function of Excel. The Rate function can be found…

Q: If the company’s tax rate is 28%, what component cost of debt should be used in the WACC…

A: Information Provided: Years to maturity = 15 years Coupon rate = 5% semi-annually Price = $985 Par…

Q: Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $30…

A: In this question we need to calculate the before-tax cost of debt for Olympic and Olympic's…

Q: Luther Industries needs to raise $25 million to fund a new office complex. The company plans on…

A: Bond price refers to the right price of bond which is also called as intrinsic value of bond. Bond…

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A: In this we need to find the yield on bond and cost to equity and than decide which is minimum.

Q: Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently…

A: Answer:-  Bond definition:-  A bond is a sort of financial asset in which the issuer owes the holder…

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A: After tax cost of debt = before tax cost of debt*(1-taxrate) Before tax cost of debt = YTM of the…

Q: Suppose ABE Co. issued a 20-year, 8 percent coupon rate bond three years ago. The bond is currently…

A: YEARS (20-3) 17 COUPON RATE 8% PMT (COUPON AMOUNT) $80 PRESENT VALUE $715 FACE VALUE (FV)…

Q: Sandhill has determined that it could issue $1050 face value bonds with an 8 percent coupon paid…

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Q: Micro Spinoffs, Inc., issued 20-year debt a year ago at par value with a coupon rate of 8%, paid…

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Q: The company wants to sell a Php 69,000,000 worth of bonds with a maturity of 25 years. The coupon…

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