Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Complete the tables below to identify the optimum capital structure for AZO Cost of Debt for Bond Ratings and Coverage Ratios Schedule of defualt risk
Complete the tables below to identify the optimum capital structure for AZO Cost of Debt for Bond Ratings and Coverage Ratios Schedule of defualt risk in terms of coverage ratio, bond rating, and spread over the risk free rate \begin{tabular}{|c|c|c|c|c|c|} \hline \begin{tabular}{l} Interest Coverage \\ Ratio greater than \end{tabular} & \begin{tabular}{c} Interest Coverage \\ Ratio less than or \\ equal to \end{tabular} & Rating & \begin{tabular}{c} Spread Over 10-year \\ Treasury Bond \\ \end{tabular} & & \\ \hline 12.5 & 100000 & Aaa/AAA & 0.69% & & \\ \hline 9.5 & 12.5 & Aa2/AA & 0.85% & \multicolumn{2}{|c|}{ Interest coverage = EBIT / Interest expense } \\ \hline 7.5 & 9.5 & A1/A+ & 1.07% & & \\ \hline 6.0 & 7.5 & A2/A & 1.18% & & \\ \hline 4.5 & 6.0 & A3/A- & 1.33% & & \\ \hline 4.0 & 4.5 & Baa2/BBB & 1.71% & & \\ \hline 3.5 & 4.0 & Ba1/BB+ & 2.31% & & \\ \hline 3.0 & 3.5 & Ba2/BB & 2.77% & & \\ \hline 2.5 & 3.0 & B1/B+ & 4.05% & & \\ \hline 2.0 & 2.5 & B2/B & 4.86% & & \\ \hline 1.5 & 2.0 & B3/B- & 5.94% & & \\ \hline 1.3 & 1.5 & Caa/CCC & 9.46% & & \\ \hline 0.8 & 1.2 & Ca2/CC & 9.97% & & \\ \hline 0.5 & 0.8 & C2/C & 13.09% & & \\ \hline-100000 & 0.5 & D2/D & 17.44% & & \\ \hline \end{tabular}
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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