Question

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 percent of face value. Both bonds pay interest semiannually. The company's tax rate is 39 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 3.84 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 3.80 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 3.78 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 3.52 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 3.56 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 5.96
percent and semiannual payments. The bond has a yield to maturity
of 5.3 percent, a par value of $2,000, and matures in 19 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

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

Kasey Corp. has a bond outstanding with a coupon rate of 5.88
percent and semiannual payments. The bond has a yield to maturity
of 4.5 percent, a par value of $2,000, and matures in 23 years.
What is the quoted price of the bond?

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