FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A corporate bond has 15 years to maturity. This bond has a 5.25% annual coupon, paid semiannually, it sells at a price of $1,125, and

A corporate bond has 15 years to maturity. This bond has a 5.25% annual coupon, paid semiannually, it sells at a price of $1,125, and it has a par value of $1,000. If the companys tax rate is 21%, what is the component cost of debt used in the WACC calculation?

A. 4.12%

B. 3.25%

C. 2.06%

D. 1.63%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

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

Get Started

Recommended Textbook for

Cryptocurrencies The Facts Behind Cryptocurrencies Their Utility And Suitability As Investments

Cryptocurrencies The Facts Behind Cryptocurrencies Their Utility And Suitability As Investments

Authors: Deidra Meynard

1st Edition

979-8353642732

More Books

Students also viewed these Finance questions

Question

Define consequential damages and describe when they can be awarded.

Answered: 1 week ago

Question

★★★★★
The following accounts and corresponding balances were drawn from Delsey Company's 2017 and 2016 year-end balance sheets: Account...

Answered: 1 week ago

Question

★★★★★
A corporate bond has 15 years to maturity. This bond has a 5.25% annual coupon, paid semiannually, it sells at a price of $1,125, and it has a par value of $1,000. If the companys tax rate is 21%,...

Answered: 1 week ago

Question

★★★★★
Sam started a venture 5 years ago with $700,000 dollars and owns 75% of the 400,000 shares issued. She went to Gemini Ventures and they offered $450,000 for 400,000 new shares. What is the post money...

Answered: 1 week ago

Question

★★★★★
Given an annual effective rate of interest 3.3%, find the AV of an 11-year annuity with continuous payments at the rate of$4000 a year at time 16. (Note that the payments stop at time 11 but the...

Answered: 1 week ago

Question

★★★★★
A pension fund purchased an office block nine months ago for $5million .The refurbishment in two months time . A company has agreed to occupy the office block six months from now .The lease agreement...

Answered: 1 week ago

Question

★★★★★
Revise the data in your worksheet to reflect the results for the subsequent period as shown below: 1 Chapter 10: Applying Excel A B D E 2 3 Data 4 Exhibit 10-2 Standard Cost Record - Variable...

Answered: 1 week ago

Question

★★★★★
Question (20) Namib Leather Ltd purchases leather which is cut into small strips. These strips are then sewn together to make car seat covers. The standard variable cost per seat cover is as follows:...

Answered: 1 week ago

Question

★★★★★
NSW TAFE GOVERNMENT Part 1: Short answer questions Read each question then answer in the spaces provided, using relevant resources including textbooks and reputable internet sources. The word count...

Answered: 1 week ago

Previous Question Next Question