Fastest Company has a debt rating of A and a tax rate of 35 percent. The current
Question:
Fastest Company has a debt rating of A and a tax rate of 35 percent. The current long-term government bond yield is 2 percent. Suppose the typical spread between long-term government yields and A-rated firms is about 2 percent. Estimate Fastest Company's after-tax cost of debt.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 75% (16 reviews)
K d longterm go...View the full answer
Answered By
PALASH JHANWAR
I am a Chartered Accountant with AIR 45 in CA - IPCC. I am a Merit Holder ( B.Com ). The following is my educational details.
PLEASE ACCESS MY RESUME FROM THE FOLLOWING LINK: https://drive.google.com/file/d/1hYR1uch-ff6MRC_cDB07K6VqY9kQ3SFL/view?usp=sharing
3.80+
3+ Reviews
10+ Question Solved
Related Book For
Financial Management Concepts and Applications
ISBN: 978-0132936644
1st edition
Authors: Stephen Foerster
Question Posted:
Students also viewed these Finance questions
-
Pfizer, a major pharmaceutical company, has a debt ratio of 10.30% and is considering increasing its debt ratio to 30%. Its cost of capital is expected to drop from 14.51% to 13.45%. Pfizer had an...
-
Komissarov Company has a debt investment in the bonds issued by Keune Inc. The bonds were purchased at par for $400,000 and, at the end of 2012, have a remaining life of 3 years with annual interest...
-
Nuber Company has a debt equity ratio of .80. Return on assets is 9.7 percent, and total equity is $ 735,000. What is the equity multiplier? Return on equity? Net income?
-
Garcia Corporation has paid 60 consecutive quarterly cash dividends (15 years). The last 6 months, however, have been a cash drain on the company, as profit margins have been greatly narrowed by...
-
Assume that Bon Temps has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds) is 7%, and that the required rate of return on the market is 12%. What is Bon Tempss required rate...
-
The current in a long cylindrical conductor of radius R is given by I(r) = I0(1 er/a). Derive expressions for the magnetic field for r < R and for r > R.
-
72 Find the prime factorization of the given number.
-
Effects of operating leverage on profitability Webster Training Services (WTS) provides instruction on the use of computer software for the employees of its corporate clients. It offers courses in...
-
Casey Inc. uses the accrual method of accounting for financialreporting purposes and the instalment method of accounting forincome tax purposes. Instalment income of $930,000 will becollected in th 2...
-
MBI is a manufacturer of personal computers. All its personal computers use a hard disk drive which it purchases from Ynos. MBI operates its factory 52 weeks per year, which requires assembling 100...
-
Suppose Fastest Company is offered accounts payable terms of "2 percent, 10 days, net 30 days" but its suppliers actually allow it to repay in 45 days. Estimate the annualized opportunity cost for...
-
How would your answer in question 5 change if Fastest Company's debt rating deteriorated to BBB and the typical spread between long-term government yields and BBB-rated firms was 3 percent?
-
The unadjusted trial balance of Tenterfield Tree Specialist, which keeps trees healthy or remove them if they cannot be saved, appears as shown below. Ignore GST. Additional information 1. Expired...
-
Bart and Millhouse own a small factory that manufactures rubber snakes used to scare away birds from houses, gardens and playgrounds. A recent and unexplained increase in the bird population in...
-
a. How large is the money supply (M1)? b. How much excess reserves are there? Instructions: Round your response to two decimal places. c. What is the money multiplier? d. What is the available...
-
Relational Database Management Systems manages 3 vital things explain. explain how RDBMS makes workable for end client like how it make read, refresh, and erase information in the database.
-
Nina worksat Pumps & Pipes Inc. ( P&P ) . Nina is a sales representative who works with, and can enter into contracts with, P&P s customers. The company closely supervises all of its sales reps and...
-
The stock at the beginning of period t denoted by xt , orders at the beginning of period t by ut , and random demand in period t (observed only after the orders are placed) by dt . We assume ordering...
-
A capillary carries blood in the direction shown. Viscosity is not negligible. Points C and D are on the central axis of the capillary. Rank the points in order of decreasing fluid speed. B. C D...
-
TRUE-FALSE QUESTIONS 1. In terms of preliminary analytical procedures, assume that the company has introduced a new product with a low price point and significant customer demand. The auditor would...
-
Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 7...
-
Current and projected free cash flows for Radell Global Operations are shown below. Growth is expected to be constant after 2006. The weighted average cost of capital is 11 percent. What is the...
-
A company has capital of $200,000,000. It has an expected ROIC of 9 percent, forecasted constant growth of 5 percent, and a WACC of 10 percent. What is its value of operations? What is its MVA?
-
Family Corporation declared a 30% stock dividend on 400,000 shares of $5 par value common stock outstanding. Market price per common share on this date was $10. What is the amount of retained ea...
-
L Limited acquired an item of equipment on 1 July 2019 for $105000. The estimated useful life of the equipment at the acquisition date was 5 years and the residual value was $5000. The company sold...
-
1. Under 100% sales assumption, using absorption coating, the COGS is calculated by adding Dorect Material (DM), Direct Labor (DL), and Fixed Overhead (FOH) a) True b) False 2. Under 100% sales...
Study smarter with the SolutionInn App