Diamond Company’s cost of debt financing is 9.5 percent. Its tax rate is 35 percent. Diamond has $2,000,000 of debt.Required:1. Calculate the after-tax cost amount of interest expense.2. How does the tax effect of interest expense affect financial leverage?View Solution: Diamond Company s cost of debt financing is 9 5 percent Its

Q: Finance Question

A: Payment No. Principal Portion ($) Interest Portion ($) Total Payment ($) Balance ($) 0 --- --- ---...

Q: Explain bird-in-the-hand argument.

A: The bird-in-hand argument has been provided by John Linter and Myron Gordon as a counterpoint to MM ...

Q: Assume the following Risk Premiums: DRP  ?  LP = 0.25% MRP =1.15% 10-year Government bonds yield  4....

A: Given that, 10-year corporate bonds yield (R)= 6.75%. 10-year Government bonds yield (Rf)= 4.65%  Li...

Q: Question 2: When one owner or creditor sells to another, the transaction takes place in the which ma...

A: Financial Market is a place where the trading of securities take place. There are major two types of...

Q: What is the current value of a share of MoreGro common stock that does not pay a current dividend? E...

A: formula for the current value of a share: price of shares=D1r-g where, D1= Dividend for the next yea...

Q: Florida Construction Equipment Rentals (FCER) purchases a new 10,000-pound-rated crane for rental to...

A: Straight line depreciation is a depreciation method which recognizes the same amount to be depreciat...

Q: JP Vineyards has sales of $891,000, a gross  profit margin of 0.322, and inventory of $179,000. What...

A: Here, to solve this question we have to find the cost of goods sold, and then the cost of goods sold...

Q: If we add to our problem that Builtrite also had $20,000 in interest expense and that they were in t...

A: The cost of borrowed funds borne by an organization is known as the interest expense.

Q: Before the financial crisis, mortgage-backed securities were considered to be very safe investments....

A: before the financial, crisis the value of mortgaged back securities was high in demand after underly...

Q: Which of the following bonds has the highest reinvestment rate risk? A) 5% corporate bond, 10 year m...

A: The term bonds refer to the debt security instruments that are issued by companies or the government...

Q: which one is correct please confirm? QUESTION 28 A firm that employs relatively large amounts o...

A: When the firm employs a large amount of labor-saving equipment for its production. This will impact ...

Q: Solve both

A: The question is based on valuation of bond , the valuation of bond is calculated as present value of...

Q: 8.7. Zero Coupon Bonds You find a zero coupon bond with a par value of $10,000 and 13 years to matur...

A: Using excel PV function

Q: Suppose Hillard Manufacturing sold an issue of bonds with a 12-year maturity, a $1,000 par value, a ...

A: The current price of the bond is the sum of the present value of future interest payment and the pre...

Q: Assume that we wish to determine the expected value and standard deviation of returns of Assets A.  ...

A: Year Return % (r) Probability (p) Product (r*p) 2019 18 .20 3.60 2020 16 .15 2.40 2021 13 .25 ...

Q: Which of the following statements is CORRECT?   a. The shorter the time to maturity, the grea...

A: Bond Maturity is the future specific date at which the face value of the bond is repaid to the inves...

Q: Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7...

A: Note : As per our guidelines, we can only answer 1 question at once. Since, you haven't mentioned wh...

Q: which one is correct please confirm? Q19: Using Futures contract to transfer price risk is called ...

A: Derivative contract can be used for hedging, speculation and arbitrage    

Q: Last month, you invested $5,000 in a 10-year corporate bond to hold as an investment.  If the Fed an...

A: Calculation of Current value of a bond is done by discounting the intermediary and final cash flow o...

Q: Solve this finance

A: given, purchase price =$27,000 down payment =5% principal = $27,000 x 95%=$25,650 R=6.02% PMT=$1125 ...

Q: A fixed-income security pays A) A fixed level of income for the life of the owner. B) A fix...

A: Fixed income security such as bonds, debentures, treasury bills etc. pay a fixed amount of income in...

Q: If you want to withdraw $20,000 at the end of two years and $55,000 at the end of four years, how mu...

A: Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based o...

Q: A bond has the following features: Coupon rate of interest (paid annually): 6 percent Principal: $1...

A: A bond is a loan to a corporation, government agency or other organization to be used for all sorts ...

Q: A firm requires Rs. 20 million in cash for meeting its transaction needs over the next four months, ...

A: Ordering costs and carrying costs are taken into consideration while determining Economic Order Quan...

Q: company has an EPS of $4.05, a book value per share of $40.50, and a market/book ratio of 1.9x. What...

A: For valuation of stock P/E ratio and price to Book value commonly used.

Q: Discuss which tools you would use to decide whether a project is worthy of financing? Also, specific...

A: net present value is the tool used to decide that a project is worthy of financing net present value...

Q: Required Rate of Return Stock R has a beta of 1.8, Stock S has a beta of 0.65, the expected rate of ...

A: Required rate of return = risk free rate  +(beta * market risk premium)

Q: Provide an evaluation of the three proposed projects whose cash flow forecasts were found below:   ...

A: Hello. Since your question has multiple sub-parts, we will solve the first three sub-parts for you. ...

Q: When you invest your money in the Stock Market, the original investment is called the

A: Answer : When you invest your money in the stock market the original investment is called the securi...

Q: A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return i...

A: Stock's Current Price = Dividend / ( Required rate of return - growth rate)  

Q: ABCEnterprises’ stock is currently selling for $64.5 per share. The dividend isprojected to increase...

A: stock price (p)= 64.5 constant rate(g) = 5.8% required rate of return = 12% no of years n = 5 years ...

Q: A corporation want to estimate the terminal cash flow. The proposed machine will be disposed of at t...

A: Terminal cash flow is cash flow you received at end of projects after disposal of equipment.So this ...

Q: Smith invests usd 10.000 in an account that pays interest. After the first year he receives 4.200 in...

A: Interest rate is calculated as a proportion of the loan amount charged to the borrower by the lender...

Q: The present worth of income from an investment that follows an arithmetic gradient is projected to b...

A: The cash flows occurring in consecutive interest periods may not be of the same amount but they chan...

Q: Explain public placements and private placements. And make slide presentation.

A: A placement is the sale of securities to a small number of private investors that is exempt from reg...

Q: 3- A Company decides to invest in a project to make a product over 7 Years. Initial investment cost ...

A: A Year  1 2 3 4 5 6 7 B No. of units to be produced --- 5,000 10,000 30,000 30,000 10,000 5,000 ...

Q: Solve B,C,D.

A: The inventory valuation method would be considered as the one under which the cost of goods sold and...

Q: A landscape architect accrued $7,876.36 in credit card debt. If the architect makes a monthly paymen...

A: The form of unsecured liability which incurs by revolving credit card loans is called as credit card...

Q: which one is correct please confirm? QUESTION 37 You sold 100 shares of stock today for $30 per...

A: Using excel Rate function

Q: Bill Norman comes to you for advice. He just purchased a large amount of inventory with the terms 2/...

A: The inventory discount period refers to the time period within which if the customer makes payments,...

Q: What is the equivalent rate of 6% compounded quarterly to compounded monthly? 5.9702% 5.6702% 5.8702...

A: The effective annual rate of interest is the real return on the savings account when the effects of ...

Q: What do employers do with the money they withhold from workers paychecks

A: Withholding is the proportion of the salary of an employee that is not included in his or her salary...

Q: 8. Biochemical Corp. requires $500,000 in financing over the next three years. The firm can borrow t...

A: Interest cost is the amount of interest a borrower pays over the life of the debt. Negative points a...

Q: Donna has Php35,000. She decided to buy a new gadget at Php30,000 and invested her remaining Php 5,0...

A: The worth of the investment after 5 years can be calculated as follows : Results obtained :

Q: Whizzkids, Inc., is experiencing a period of rapid growth. Earnings anddividends per share are expec...

A: Dividend refers to that portion of the profits that are to be distributed among shareholders as a re...

Q: If a firm wishes to retain the same return on equity when its net profit margin and total asset turn...

A: Net profit margin is given by profit divided by sales.So decline indicates that net income is declin...

Q: The Highest Potential, Inc., will pay a quarterly dividend per share of $1 atthe end of each of the ...

A: Given information : Expected dividend = $1 Growth rate = 5% Discount rate = 10%  

Q: What is the present value of a 3-year annuity of $120 if the discount rate is 7%? (Do not round inte...

A: Annuity can be defined as series of payments which are made at regular intervals. Examples of annuit...

Q: On October 1, 2020, ZKF announces stock split on its 100,000 shares of $ value common stock outstand...

A: Note : As per the bartelby guidelines, only first question will be answered. Definition : Stock spli...

Q: Night Shades Inc. (NSI) manufacturers biotech sunglasses. These sunglasses sell for $150 each, and c...

A: a. selling price =$150 cost =$70 fixed cost =$100,000 break even=fixed costselling price - variable ...