Question

If you face a 10% marginal tax rate, what is your after-tax return on each of...

If you face a 10% marginal tax rate, what is your after-tax return on each of the following bonds?

A 5% coupon semiannual corporate bond with 10 years to maturity, currently selling for $880.
%

A 8% coupon semiannual corporate bond with 12 years to maturity, currently selling for $1,060.

%

A 7% coupon semiannual municipal bond with 3 years to maturity, currently selling for $1,044.

%

Homework Answers

Answer #1

....

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
which one of the following two bonds would you purchase if your marginal tax rate is...
which one of the following two bonds would you purchase if your marginal tax rate is 28% 1. corporate bond which yields 11% rate of return, or 2. The municipal bond which yields 6.9% rate of return
If the marginal tax rate (MTR) is 35%, a 3.5% annual coupon rate municipal bond will...
If the marginal tax rate (MTR) is 35%, a 3.5% annual coupon rate municipal bond will have higher after-tax cash flow than a corporate bond with which annual coupon rates (choose all that apply)? 3.5% 4% 4.5% 5% 5.5% 6%
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity...
What is the price of a $1000 face value zero-coupon bond with 4 years to maturity if the required return on these bonds is 3%? Consider a bond with par value of $1000, 25 years left to maturity, and a coupon rate of 6.4% paid annually. If the yield to maturity on these bonds is 7.5%, what is the current bond price? One year ago, your firm issued 14-year bonds with a coupon rate of 6.9%. The bonds make semiannual...
Company A has a debt issue outstanding with a 6% coupon rate and 10 years to...
Company A has a debt issue outstanding with a 6% coupon rate and 10 years to maturity. The debt is BB+ rated and is trading at $913.21 per bond. At this price, the bonds have a yield to maturity of 7.25%. The 10-year Treasury bond yield is 4.25%. What is Company A's pretax cost of debt? Company B has a publicly-traded bond issue of $400 million outstanding. These bonds have a 5.25% annual coupon rate, 20 years remaining to maturity,...
Company's long-term debt is selling for $900 per bond, with the tax rate of 40%. These...
Company's long-term debt is selling for $900 per bond, with the tax rate of 40%. These semiannual bonds have 10 years to maturity and 8% annual coupon rate with semiannual payment frequency. How costly is it for this company to issue new bonds? Assume par value of 1,000.
Please calculate the after-tax return on the following securities for a company that is in the...
Please calculate the after-tax return on the following securities for a company that is in the 30% federal tax bracket. Assume the tax rate on dividends is 15%. A. Treasury bonds at 5% B. Corporate bonds at 8.25% C. Municipal bonds at 7% D. Preferred stock at 6.5%
based on the after-tax returns, at what federal tax rate is an investor better off choosing...
based on the after-tax returns, at what federal tax rate is an investor better off choosing a tax-exempt 5.31 percent municipal bond over a taxable 7.62 percent corporate bond? The after-tax return on the corporate bond when the tax rate is 10% is ___% (round to two decimal places)
A firm’s bonds have a maturity of 10 years with a $1000 face value. Have an...
A firm’s bonds have a maturity of 10 years with a $1000 face value. Have an 8% semiannual coupon, are callable in 5 years at $1,050, and currently sell at a price of $1100. What are their nominal yield to maturity and their nominal yield to call? What return should investors expect to earn on these bonds? PLEASE SHOW WORK, EXPLANATION, AND EQUATIONS
7) The prices of several bonds with face values of $1,000 are summarized in the following​...
7) The prices of several bonds with face values of $1,000 are summarized in the following​ table: Bond A B C D Price $905.72 $057.48 $1,179.66​ $1,000.00 For each​ bond, provide an answer for whether it trades at a​ discount, at​ par, or at a premium. Bond A trades at​ (a).----------------? Is it Discount, Par Or Premium?    (Select from the​ drop-down menu.) 5) Suppose a 10​-year, $1,000 bond with a 12% coupon rate and semiannual coupons are trading for a...
Calculate the​ after-tax cost of debt for the following bond. The face value of the bond...
Calculate the​ after-tax cost of debt for the following bond. The face value of the bond is ​$1,000​, interest is paid​ annually, the coupon rate is 14​% and the bond matures in 7 years. Assume that the corporate tax rate is 38​% and the issue price of the bond was ​$870.