A company issues 15-year, $1,000 par-value bonds, with a coupon rate of 5%. The bonds are sold for $619.70. The tax rate is 30%. Compute the
cost of debt before taxes and after taxes.
a. Compute the market value of the bond
b. What will the net price be if f…
ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 114 percent of
face value. The issue makes semiannual payments and has an embedded cost of 9.8 percent annually.
a) What is ICU’s pretax cost?
b) What is ICU’s aftertax cost if tax rate is 38%?
Please explain in terms I can enter in my financial calculator. Thanks!
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Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 14 years to maturity that is quoted at 106 |
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What is the company’s pretax cost of debt? (Do not round intermediate calculation and round your answer to 2 |
| Cost of debt | % |
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If the tax rate is 35 percent, what is the aftertax cost of debt? (Do not round intermediate calculations and |
| Cost of debt | % |
(Cost of debt) Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return.
a. compute the market value of the bonds.
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b. What will the net price be if flotation cost are 10.5 percent of the market price?
c. How many bonds will the firm have to issue to receive the needed funds?
d. What is the firm’s after-tax cost of debt if its average tax rate is 25 percent and is marginal tax rate is 34 percent?
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