Question

A firm has issued $20 million in long-term bonds that now have 10 years remaining until...

A firm has issued $20 million in long-term bonds that now have

10 years remaining until maturity. The bonds carry an 8% annual

coupon but are selling in the market for $877.10. The firm also

has $45 million in the market value of the common stock. For the cost of

capital purposes, (a) what portion of the firm is debt-financed

and (b) what is the after-tax cost of debt, if the tax rate is 35%?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #2

answered by: anonymous
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A firm has issued $20 million in long-term bonds that now have 10 years remaining until...
A firm has issued $20 million in long-term bonds that now have 10 years remaining until maturity. The bonds carry an 8% annual coupon but are selling in the market for $877.10. The firm also has $45 million in the market value of the common stock. For the cost of capital purposes, (a) what portion of the firm is debt-financed and (b) what is the after-tax cost of debt, if the tax rate is 35%?
A firm has issued $20 million in long-term bonds that now have 10 years remaining until...
A firm has issued $20 million in long-term bonds that now have 10 years remaining until maturity. The bonds carry an 8% annual coupon and are selling in the market for $877.10. The firm also has $45 million in market value of common stock. For cost of capital purposes, what portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%?
A firm has issued $20 million in long-term bonds that now have 10 years remaining until...
A firm has issued $20 million in long-term bonds that now have 10 years remaining until maturity. The bonds carry an 8% annual coupon but are selling in the market for $877.10. The firm also has $45 million in market value of common stock. For cost of capital purposes, 1. What portion of the firm is debt financed and what is the after-tax cost of debt, if the tax rate is 35%? 2. In computing the cost of capital, which...
Shidao Co. has issued 9% annual coupon bonds that are now selling at a yield to...
Shidao Co. has issued 9% annual coupon bonds that are now selling at a yield to maturity of 10% and current yield of 9.875%. Assume these bonds carry a face value of $1,000. What is the remaining maturity of these bonds?
Suppose a company currently has some bonds outstanding in the market. The bonds have 10 years...
Suppose a company currently has some bonds outstanding in the market. The bonds have 10 years until maturity, they pay a coupon rate of 6% on a semiannual basis. If the company’s bonds are selling for $965 now, and the company’s tax rate is 40%, what is its after-tax cost of debt? What is Pretax cost of debt? State Appropriate Mathematical formula to be used and detailed steps in the solution calculations.
1. The company has 60,000 bonds with a 30-year life outstanding, with 15 years until maturity....
1. The company has 60,000 bonds with a 30-year life outstanding, with 15 years until maturity. The bonds carry a 10 percent semi-annual coupon, and are currently selling for $874.78. 2. You also have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The current market price is $90.00. 3. The company has 5 million shares of common stock outstanding with a currently price of $17.00 per share. The stock exhibits a constant growth rate of 10 percent....
A firm has a bonds with 10 years to maturity, and a coupon rate of 8%...
A firm has a bonds with 10 years to maturity, and a coupon rate of 8% (paid semi?annually). The bond currently sells for $932. The firm has a beta of 1.2. The stock price is $20/share. 3?month treasury bills yield 5%. The firm has outstanding, $10 million in debt at face value and there 1 million shares of common stock outstanding. Assume that the market risk premium is 5% and the tax rate is 35%. Calculate the WACC.
Company has 60,000 bonds with 30-year life outstanding, 15 years until maturity. The bonds carry a...
Company has 60,000 bonds with 30-year life outstanding, 15 years until maturity. The bonds carry a 10 percent semi-annual coupon, and are currently selling for $874.78. You have 100,000 shares of $100 par, 9% dividend perpetual preferred stock outstanding. The current market price is $90. Any new issues of preferred stock would incure a $3.00 per share flotation cost. The company has 5 million shares of common stock outstanding with a currently price of $14 per share. The stock exhibits...
Ulta Inc. issued long-term debt with a remaining term of 28 years with semi-annual payments with...
Ulta Inc. issued long-term debt with a remaining term of 28 years with semi-annual payments with a coupon rate of 18%. Currently, these bonds have a price of $924. FV we can assume is $1,000, what is the PMT? Thank you.
Your company has a target capital structure of 40% debt, 15% preferred, and 45% common equity....
Your company has a target capital structure of 40% debt, 15% preferred, and 45% common equity. Your bonds carry a 9% coupon, have a par value of $1,000, and 7 years remaining until maturity. They are currently selling for $950.51. The cost of preferred is 7.50%. The risk free rate is 4%, the market risk premium is 8%, and beta is 1.0. The firm will not be issuing any new stock, and the tax rate is 40%. What is its...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT