Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 28, 2024

A companys 6% coupon rate, semiannual payment, $1000 par value bond that matures in 20 years sells for $545. The companys marginal tax rate (state

A companys 6% coupon rate, semiannual payment, $1000 par value bond that matures in 20 years sells for $545. The companys marginal tax rate (state plus federal) is 35%. What is the firms after-tax cost of debt for the purposes of calculating WACC. ( 7.85% is correct answer)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

34. Suppose that when the pH of a certain chemical compound is 5.00, the pH measured by a randomly selected beginning chemistry student is a random variable with mean 5.00 and standard deviation .2....

Answered: 1 week ago

Question

★★★★★

Morton Industries is considering opening a new subsidiary in Boston, to be operated as a separate company. The companys financial analysts expect the new facilitys average EBIT level to be $6 million...

Answered: 1 week ago

Question

★★★★★

python progrmming task 3 and 4 Task 3: Practice How to Use String Object a) What is wrong with the following code? Explain verbally. el sl"Canada" s1 [2] = 'P'+' Computing Science 120.s10 Page 3 of...

Answered: 1 week ago

Question

★★★★★

Munoz Corporation uses ABC to determine product costs for external financial reports. At the beginning of the year, management made the following cost and activity estimates in the companys five...

Answered: 1 week ago

Question

★★★★★

Huntington Boards manufactures two models of surfboards, Basic and Competition, in a facility in Southern California. In fabrication, machine setup costs are driven by the number of setups, machine...

Answered: 1 week ago

Question

★★★★★

Mary Ann bought a new computer for $2,000 and financed the entire purchase price at a nominal rate of interest payable 12 times per year at 9% per annum. She repaid her loan in 4 years with 48 equal...

Answered: 1 week ago

Question

★★★★★

1 2 Chang Corporation sells products for $120 each that have variable costs of $80 per unit. Chang's 3 annual fixed cost is $720,000. $120 $80 $720,000 4 Required Use the per-unit contribution margin...

Answered: 1 week ago

Question

★★★★★

9. Effects of portfolio size on portfolio risk The following graph plots portfolio risk against the size of the portfolio as measured by the number of stocks in the portfolio. (Hint: Hover the mouse...

Answered: 1 week ago

Question

★★★★★

MGT-445: Ethical & Legal Business Concepts In your Bible, read: 2 Corinthians 8:7 Colossians 3:23-24 Navigate to the threaded discussion and use clear, critical thinking to discuss the following: How...

Answered: 1 week ago

Previous Question Next Question