Question

Calculate the after-tax cost of debt under each of the following conditions: rd of 14%, tax...

  1. Calculate the after-tax cost of debt under each of the following conditions:
  1. rd of 14%, tax rate of 0%. Round your answer to two decimal places.

_%

  1. rd of 14%, tax rate of 25%. Round your answer to two decimal places.

_%

  1. rd of 14%, tax rate of 30%. Round your answer to two decimal places.

_ %

  1. LL Incorporated's currently outstanding 11% coupon bonds have a yield to maturity of 8.4%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 25%, what is LL's after-tax cost of debt? Round your answer to two decimal places.

_%

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Module 5 Worksheet—Chapter 9 Cost of Capital – Complete in Excel. Please - no rounding. 1....
Module 5 Worksheet—Chapter 9 Cost of Capital – Complete in Excel. Please - no rounding. 1. Calculate the after-tax cost of the debt under each of the following conditions: a. rd of 14%, tax rate of 15% b. rd of 14%, tax rate of 30% c. rd of 14%, tax rate of 45% 2. LL Inc.’s currently outstanding 15% coupon bonds have a yield to maturity of 7.5%. LL believes it could issue new bonds at par that would provide...
3. An overview of a firm's cost of debt To calculate the after-tax cost of debt,...
3. An overview of a firm's cost of debt To calculate the after-tax cost of debt, multiply the before-tax cost of debt by a) (1+T) b) (1-T) Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 7.30% for a period of six years. Its marginal federal-plus-state tax rate is 35%. WGC’s after-tax cost of debt is (rounded to two decimal places). At the present time, Western Gas & Electric Company (WGC) has 5-year noncallable bonds...
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s...
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 10.00 percent semiannual coupon bonds are selling at a price of $846.68. These bonds are the only debt outstanding for the firm. What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.) What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? (Round intermediate calculations...
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s...
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 15.50 percent semiannual coupon bonds are selling at a price of $1,117.25. These bonds are the only debt outstanding for the firm. (a1) Correct answer iconYour answer is correct. What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.) YTM enter the current YTM of the bonds in percentages rounded to 2 decimal places %...
Bond Yield and After-Tax Cost of Debt A company's 7% coupon rate, semiannual payment, $1,000 par...
Bond Yield and After-Tax Cost of Debt A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $747.72. The company's federal-plus-state tax rate is 35%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal places. %
The Cost of Debt and Flotation Costs. Suppose a company will issue new 25-year debt with...
The Cost of Debt and Flotation Costs. Suppose a company will issue new 25-year debt with a par value of $1,000 and a coupon rate of 10%, paid annually. The issue price will be $1,000. The tax rate is 35%. If the flotation cost is 5% of the issue proceeds, then what is the after-tax cost of debt? Disregard the tax shield from the amortization of flotation costs. Round your answer to two decimal places.    What if the flotation...
Problem 14-6 Calculating Cost of Debt [LO2] Viserion, Inc., is trying to determine its cost of...
Problem 14-6 Calculating Cost of Debt [LO2] Viserion, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 27 years to maturity that is quoted at 96 percent of face value. The issue makes semiannual payments and has an embedded cost of 7 percent annually. a. What is the company’s pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)...
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s...
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 15.50 percent semiannual coupon bonds are selling at a price of $1,117.25. These bonds are the only debt outstanding for the firm. Collapse question part (a1) What is the current YTM of the bonds? (Round final answer to 2 decimal places, e.g. 15.25%.) YTM %
How did they arrive with the before-tax cost of debt and the after-tax cost of debt...
How did they arrive with the before-tax cost of debt and the after-tax cost of debt in the table located below from the following information. Please show all workings. The company will contract a new loan in the sum of $2,000,000 that is secured by machinery and the loan has an interest rate of 6 percent. Healthy Options has also issued 4,000 new bond issues with an 8 percent coupon, paid semiannually, and which matures in 10 years. The bonds...
Your firm is considering a new investment proposal and would like to calculate its weighted average...
Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in​ this, compute the cost of capital for the firm for the​ following: 1. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.2% that is paid semiannually. The bond is currently selling for a price of $1127 and will mature in 10 years. The firm;s tax rate is 34%....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT