Question

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 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? Multiple Choice 4.12% 2.89% 5.15% 3.09% 2.69%

Answer #1

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 3.74 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...

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 3.52 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 3.78 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...

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

Simple Foods has a zero coupon bond issue outstanding that
matures in 14 years. The bonds are selling at 65 percent of par
value. What is the company's aftertax cost of debt if the combined
tax rate is 23 percent? (Use semiannual compounding.)
Select one:
4.48 percent
2.38 percent
3.22 percent
1.19 percent
2.88 percent

Jiminy’s Cricket Farm issued a bond with 30 years to maturity
and a semiannual coupon rate of 5 percent 3 years ago. The bond
currently sells for 94 percent of its face value. The company’s tax
rate is 22 percent. The book value of the debt issue is $50
million. In addition, the company has a second debt issue on the
market, a zero coupon bond with 7 years left to maturity; the book
value of this issue is $45...

Olympic Sports has two issues of debt outstanding. One is a 7%
coupon bond with a face value of $37 million, a maturity of 10
years, and a yield to maturity of 8%. The coupons are paid
annually. The other bond issue has a maturity of 15 years, with
coupons also paid annually, and a coupon rate of 8%. The face value
of the issue is $42 million, and the issue sells for 96% of par
value. The firm's tax...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 10 minutes ago

asked 26 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago