Question

Q36

Too Young, Inc., has a bond outstanding with a coupon rate of 7.0 percent and annual payments. The bond currently sells for $1919 and matures in 17 years. The par value is $2000. What is the company's pretax cost of debt? Group of answer choices 7.22% 3.51% 7.11% 7.43% 7.68%

Answer #1

Current Price = 1919

Coupon 7%

Maturity = 17 years

Let's assume the YTM be 6.5%

Value of Bond =

=

= 2101.10576697

Now,

Let's assume the YTM be 8%

Value of Bond =

=

= 1817.56723784

YTM =

= 6.5% + ((2101.10576697 - 1919) / (2101.10576697 - 1919) + (1919 - 1817.56723784)) * (8-6.5)

= 6.5% + (182.10576697 / 283.53852913) * 1.5

= 6.5% + 0.93

= 7.43%

Too Young, Inc., has a bond outstanding with a coupon rate of
6.2 percent and semiannual payments. The bond currently sells for
$1,954 and matures in 22 years. The par value is $2,000. What is
the company's pretax cost of debt?

Too Young, Inc., has a bond outstanding with a coupon rate of
6.3 percent and semiannual payments. The bond currently sells for
$944 and matures in 20 years. The par value is $1,000. What is the
company's pretax cost of debt? Multiple Choice 3.35% 6.90% 7.34%
6.82% 7.10%

Too Young, Inc., has a bond outstanding with a coupon rate of
6.7 percent and semiannual payments. The bond currently sells for
$948 and matures in 24 years. The par value is $1,000. What is the
company's pretax cost of debt? Multiple Choice 7.75% 7.50% 3.54%
7.29% 7.16%
Multiple Choice
7.75%
7.50%
3.54%
7.29%
7.16%

Young Company has a bond outstanding with a coupon rate of 6.2
percent and semiannual
payments. The bond currently sells for $943 and matures in 19
years. The par value is $1,000. What
is the company's pretax cost of debt?

Galvatron Metals has a bond outstanding with a coupon rate of 6.7
percent and semiannual payments. The bond currently sells for
$1,863 and matures in 21 years. The par value is $2,000 and the
company's tax rate is 40 percent. What is the company's aftertax
cost of debt?
A. 7.22%
B. 4.33%
C. 4.00%
D. 6.74%
E. 4.59%

Galvatron Metals has a bond outstanding with a coupon rate of 6
percent and semiannual payments. The bond currently sells for
$1,940 and matures in 20 years. The par value is $2,000 and the
company's tax rate is 39 percent. What is the company's aftertax
cost of debt?

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%

Johnson. Inc has a bond outstanding with a coupon rate of 2% with
semiannual payments. the bond is currently selling for 863 and
matures in about 15 yrs. The par value is 1000. please identify the
pretax cost of debt.

William metals has a bond outstanding with a coupon rate of 6.6
percent and semiannual payments. The bond currently sells for
98.75% of the par and matures in 15 years. The par value is $2,000
and the companys tax rate is 21 percent. What is the companys
after-tax cost of debt?

Footsteps Co. has a bond outstanding with a coupon rate of 5.9
percent and annual payments. The bond currently sells for $984.29
matures in 23 years and has a par value of $1000 what is the Ytm of
the

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 10 minutes ago

asked 32 minutes ago

asked 32 minutes ago

asked 32 minutes ago

asked 35 minutes ago

asked 46 minutes ago

asked 57 minutes ago

asked 59 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago