Question

Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of 3.74 percent, a par value of $1,000 per bond, matures in 8 years, has a total face value of $4.8 million, and is quoted at 105 percent of face value. The second issue has a coupon rate of 6.51 percent, a par value of $1,000 per bond, matures in 18 years, has a total face value of $9.1 million, and is quoted at 103 percent of face value. Both bonds pay interest semiannually. The company's tax rate is 40 percent. What is the firm's weighted average aftertax cost of debt?

Answer #1

Great Lakes Packing has two bond issues outstanding. The first
issue has a coupon rate of 3.52 percent, a par value of $1,000 per
bond, matures in 3 years, has a total face value of $3.7 million,
and is quoted at 103 percent of face value. The second issue has a
coupon rate of 6.02 percent, a par value of $2,000 per bond,
matures in 22 years, has a total face value of $8.0 million, and is
quoted at 96...

Great Lakes Packing has two bond issues outstanding. The first
issue has a coupon rate of 3.80 percent, a par value of $2,000 per
bond, matures in 5 years, has a total face value of $5.1 million,
and is quoted at 105 percent of face value. The second issue has a
coupon rate of 6.57 percent, a par value of $1,000 per bond,
matures in 15 years, has a total face value of $9.4 million, and is
quoted at 108...

Great Lakes Packing has two bond issues outstanding. The first
issue has a coupon rate of 3.84 percent, a par value of $2,000 per
bond, matures in 7 years, has a total face value of $5.3 million,
and is quoted at 102 percent of face value. The second issue has a
coupon rate of 6.61 percent, a par value of $1,000 per bond,
matures in 16 years, has a total face value of $9.6 million, and is
quoted at 105...

Great Lakes Packing has two bond issues outstanding. The first
issue has a coupon rate of 3.84 percent, a par value of $2,000 per
bond, matures in 7 years, has a total face value of $5.3 million,
and is quoted at 102 percent of face value. The second issue has a
coupon rate of 6.61 percent, a par value of $1,000 per bond,
matures in 16 years, has a total face value of $9.6 million, and is
quoted at 105...

Great Lakes Packing has two bond issues outstanding. The first
issue has a coupon rate of 3.78 percent, a par value of $1,000 per
bond, matures in 4 years, has a total face value of $5.0 million,
and is quoted at 105 percent of face value. The second issue has a
coupon rate of 6.55 percent, a par value of $1,000 per bond,
matures in 16 years, has a total face value of $9.3 million, and is
quoted at 107...

Great Lakes Packing has two bond issues outstanding. The first
issue has a coupon rate of 3.56 percent, a par value of $1,000 per
bond, matures in 5 years, has a total face value of $3.9 million,
and is quoted at 106 percent of face value. The second issue has a
coupon rate of 6.18 percent, a par value of $2,000 per bond,
matures in 24 years, has a total face value of $8.2 million, and is
quoted at 94...

Kasey Corp. has a bond outstanding with a coupon rate of 5.9
percent and semiannual payments. The bond has a yield to maturity
of 4.9 percent, a par value of $1,000, and matures in 21 years.
What is the quoted price of the bond?

The Corner Bakery has a bond issue outstanding that matures in 7
years. The bonds pay interest semi-annually. Currently, the bond
prices are quoted at $1014 per $1000 face value and carry a 9
percent coupon. What is the firm's aftertax cost of debt if the tax
rate is 30 percent?
4.88 percent
5.36 percent
5.45 percent
6.11 percent
8.74 percent

Kasey Corp. has a bond outstanding with a coupon rate of 5.8
percent and semiannual payments. The bond has a yield to maturity
of 6.9 percent, a par value of $1,000, and matures in 13 years.
What is the quoted price of the bond?
1,827.86
1,399.16
183.03
186.16
139.92

Galvatron Metals has a bond outstanding with a coupon rate of
5.7 percent and semiannual payments. The bond currently sells for
$943 and matures in 19 years. The par value is $1,000 and the
company's tax rate is 39 percent. What is the company's aftertax
cost of debt?
2.90%
3.11%
4.01%
3.50%
3.79%

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