Question

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	8.80	%	105.8	4	years	$	28,000,000
2	7.00		94.6	7	years		48,000,000
3	8.50		104.6	14.5	years		53,000,000
4	9.00		106.5	24	years		68,000,000

must find the Market Value for each bond.

The weight of each bond

and the YTM of each bond

and If the corporate Tax rate is 40% what is the after tax cost of the company's debt?

I must

Answer 1

Market Value for each bond., weight of each bond, YTM of each bond and weightage average before tax cost of debt is calculated in excel and screen shot provided below:

Weightage average before tax cost of debt = 8.00%

Tax rate = 40%

After tax cost of debt = 8% × (1 - 40%)

= 4.80%

After tax cost of debt is 4.80%.