Question

Following is the most recent FINRA bond quote for a Kimberly Clark Inc. corporate bond. (Assume semi-annual coupons)

Company (ticker) Coupon Maturity Last Price

Kimberly Clark (KMB) 7.500 Apr 30, 2040 112.350

What is the after-tax cost of debt for Kimberly Clark, Inc. assuming that floatation costs are 3% and that Kimberly Clark pays taxes at a 28% rate? (Assume today is April 30, 2020)

4.81%

4.96%

5.40%

6.68%

9.68%

Answer #1

Face
Value = $1,000

Current Price = $112.350 *$1,000 = $1,123.50

Market
Price = $1,123.50 - $1,123.50 * 3%

Market Price = $1,123.50 - $33.71 = $1,089.79

Annual
Coupon Rate = 7.5%

Semiannual Coupon Rate = 3.75%

Semiannual Coupon = 3.75%*$1,000 = $37.5

Time to
Maturity = 20 years

Semiannual Period to Maturity = 40

Let semiannual YTM be i%

$1,089.79 = $37.50 * PVIFA(i%, 42) + $1,000 * PVIF(i%, 40)

Using
financial calculator:

N = 40

PV = -1,089.79

PMT = 37.5

FV = 1000

I = 3.34%

Semiannual YTM =
3.34%

Annual YTM = 2 * 3.34%

Annual YTM = 6.68%

Before-tax Cost of Debt
= 6.68%

After-tax Cost of Debt = 6.68% * (1 - 0.28)

After-tax Cost of Debt = 4.81%

Following is the most recent FINRA bond quote for a Kimberly
Clark Inc. corporate bond. (Assume semi-annual coupons)
Company (ticker)
Coupon
Maturity
Last Price
Kimberly Clark (KMB)
7.500
Apr 30, 2040
112.350
What is the after-tax cost of debt for Kimberly Clark, Inc.
assuming that floatation costs are 3% and that Kimberly Clark pays
taxes at a 28% rate? (Assume today is April 30, 2020)
4.81%
4.96%
5.40%
6.68%
9.68%

1) Use the following corporate bond
quotes:
· Company (Ticker)
= Gap Inc. (GPS)
· Coupon = 6.2%
· Maturity = Jan
15, 2020
· Last Price =
102.256
· Last Yield =
??
Assume today is Jan
15, 2016 and the face value of the bond is $1000, semi-annual
coupons. Find the yield to maturity for the bond issued by Gap
Inc?

1. Use the following corporate bond quote information to answer
the questions that follow. Since this is a corporate bond, assume
the company makes semi-annual coupon payments and also assume the
bond matures on today’s date (May. 28) in its maturity year and the
par value is $1,000. The price is a dollar term.
Company Coupon(%) Maturity Price($) Yield
XYZ Inc. 7.000 May 28, 2025 976.67
a. What is the bond’s yield to maturity?
b. If your required return is...

Suppose the following bond quote for IOU Corporation appears in
the financial page of today’s newspaper. Assume the bond has a face
value of $1,000, and the current date is April 15, 2016. Company
(Ticker) Coupon Maturity Last Price Last Yield EST Vol (000s) IOU
(IOU) 7.50 Apr 15, 2040 91.715 ?? 1,845
What is the yield to maturity of the bond? (Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g.,...

You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019. The bonds have a par value of $2,000 and semiannual
coupons.
You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019. The bonds have a par value of $2,000 and semiannual
coupons.
Company
(Ticker)
Coupon
Maturity
Last
Price
Last
Yield
EST $ Vol
(000’s)...

You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019. The bonds have a par value of $2,000 and semiannual
coupons.
Company
(Ticker)
Coupon
Maturity
Last
Price
Last
Yield
EST $ Vol
(000’s)
Xenon, Inc. (XIC)
6.700
Jan 15, 2036
94.313
??
57,375
Kenny Corp. (KCC)
7.250
Jan 15, 2035
??
5.40
48,954
Williams Co. (WICO)
??
Jan...

You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019 and the bonds have a par value of $2,000. Company (Ticker)
Coupon Maturity Last Price Last Yield EST $ Vol (000’s) Xenon, Inc.
(XIC) 6.800 Jan 15, 2037 94.323 ?? 57,376 Kenny Corp. (KCC) 7.260
Jan 15, 2034 ?? 6.30 48,955 Williams Co. (WICO) ?? Jan 15, 2040
96.875 6.55 43,816 What is the coupon rate for...

You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019. The bonds have a par value of $2,000 and semiannual
coupons. Company (Ticker) Coupon Maturity Last Price Last Yield EST
$ Vol (000’s) Xenon, Inc. (XIC) 7.300 Jan 15, 2042 94.373 ?? 57,381
Kenny Corp. (KCC) 7.310 Jan 15, 2039 ?? 6.40 48,960 Williams Co.
(WICO) ?? Jan 15, 2045 96.925 6.65 43,821
What is the coupon...

You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019. The bonds have a par value of $2,000 and semiannual
coupons.
Company
(Ticker)
Coupon
Maturity
Last
Price
Last
Yield
EST $ Vol
(000’s)
Xenon, Inc. (XIC)
5.900
Jan 15, 2028
94.233
??
57,367
Kenny Corp. (KCC)
7.170
Jan 15, 2025
??
6.12
48,946
Williams Co. (WICO)
??
Jan...

You find the following corporate bond quotes. To calculate the
number of years until maturity, assume that it is currently January
15, 2019. The bonds have a par value of $2,000 and semiannual
coupons.
Company
(Ticker)
Coupon
Maturity
Last
Price
Last
Yield
EST $ Vol
(000’s)
Xenon, Inc. (XIC)
5.600
Jan 15, 2025
94.203
??
57,364
Kenny Corp. (KCC)
7.140
Jan 15, 2024
??
5.18
48,943
Williams Co. (WICO)
??
Jan...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 48 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 4 hours ago