The 8 per cent irredeemable bonds of Eranio plc are currently trading at 92 per 100 bond.

Question:

The 8 per cent irredeemable bonds of Eranio plc are currently trading at £92 per £100 bond. If the company pays corporation tax of 19 per cent, what is the current after-tax cost of debt of the bonds?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Corporate Finance Principles And Practice

ISBN: 9781292450940

9th Edition

Authors: Denzil Watson, Antony Head

See More Books

Question Posted: Nov 02, 2023 07:20 AM

See More Questions

Five years ago, Elite plc issued 8 per cent irredeemable bonds at their par value of 100. The current market price of these bonds is 92. If the company pays corporate tax at a rate of 30 per cent,...
Calet plc pays corporation tax at 19 per cent and has the following capital structure: Ordinary shares: 1,000,000 ordinary shares of nominal value 25p per share and market value of 79p per share. A...
Mojo Inc, a US company engaged in the automotive industry, proposes to acquire Ottotek Corporation, an unlisted spare parts manufacturer. For this purpose the treasury team of Mojo Inc has been asked...
Consider a game played by two lobbyists 1 and 2 sponsoring two distinct versions of a bill. The value of having version i = {1, 2} approved equals v; to lobbyist i and equals 0 to lobbyist j, for...
Reynolds Computer Service offers data processing services to retail clothing stores. The following data have been collected to aid in the preparation of adjusting entries for Reynolds Computer...
Bliss Perfume Company issued $300,000 of 10 percent bonds on January 1, 20X2, at 110. The bonds mature 10 years from issue and have semiannual interest payments on January 1 and July 1. Parsons...
What is intermittent processing and when is it used? Contrast it with flow processing.
Consider a monopolistically competitive market with N firms. Each firms business opportunities are described by the following equations: Demand: Q = 100/N P Marginal Revenue: MR = 100/N 2Q Total...
Missoula Industries manufactures a product with the following costs per unit at the expected production of 30,000 units: Direct materials $ 5 Direct labor 15 Variable manufacturing overhead 8 The...
Two companies, A and B, have similar net operating incomes (i.e. gross income less operating expenses) and similar levels of business risk. The only difference is that Company A is not geared,...
The following information has been taken from the accounts of Merlin plc: (i) The current ex div ordinary share price of Merlin plc is 3.14. Both dividends and share price are expected to increase by...
An EM wave has a wavelength of 650 nm. What is its frequency, and how would we classify it?
Sample for a Poll There are 30,488,983 Californians aged 18 or older. If The Gallup organization randomly selects 1068 adults without replacement, are the selections independent or dependent? If the...
Part A: You have successfully graduated Conestoga College and have joined a public accounting firm in their tax department. You have been assigned to work on a project with Emily Wilson, one of the...
Write a program that gets a list of integers from input, and outputs negative integers in descending order (highest to lowest). Ex: If the input is: 10 -7 4-39 -6 12 -2 the output is: -2-6-7-39 For...
The manager of a division that produces add-on products for the automobile industry had just been presented the opportunity to invest in two independent projects. The first is an air conditioner for...
4. We are interested in the effect on test scores of the student-teacher ratio (STR). The following regression results have been obtained using the California data set. All the regressions used...
For each of the following linear transformations L: R2 R2, find a matrix representative, and then describe its effect on (i) The x-axis; (ii) The unit square S = (0 x, v 1): (iii) The unit disk D...
A. Select a recent issue (paper or online) of Report on Business Magazine, Canadian Business Magazine (online only), Bloomberg Businessweek, Fast Company, The Economist, or another business magazine....
Distinguish between how economic decisions are made in a command economy and how they are made in a market-directed economy.
Would the functions that must be provided and the development of wholesaling and retailing systems be any different in a command economy from those in a market-directed eco n omy?
Explain why a market-directed macro-marketing system encourages innovation. Give an example.
Explain the respective outcomes reached by the courts in the following case involving sales of land: Californian Copper Syndicate Ltd v Harris
A county will invest $5,700,000 to clean up a chemical spill that occurred following a natural disaster. At the end of the 10-year planning horizon, an additional $1,300,000 will be spent in...
Required information Problem 6-9B Record transactions and prepare a partial income statement using a periodic inventory system (LO6-8) [The following information applies to the questions displayed...

The 8 per cent irredeemable bonds of Eranio plc are currently trading at 92 per 100 bond.

Question:

Step by Step Answer:

Ka 100 x ...View the full answer

Corporate Finance Principles And Practice

Students also viewed these Business questions