Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show all work please The bonds currently sell S USA Manufacturing issued 30-year, 7.5 percent semiannual bonds 6 ycars ago. at 101 percent of face

Show all work please image text in transcribed
The bonds currently sell S USA Manufacturing issued 30-year, 7.5 percent semiannual bonds 6 ycars ago. at 101 percent of face value. What is the firm's aftertax cost of debt if the tax rate is 35 percent? A. 4.82 percent B. 5.62 percent C. 376 percent D. 3.59 percent E. 4.40 percent 9 Great Lakes Packing has two bond issues outstanding. The first issue has a coupon rate of S percent matures in 6 years, has a total face value of $5 million, and is quoted at 101.2 percent of face value. The second issue has a 7.5 percent coupon, matures in 13 years, has a total face value of S18 million, and is quoted at 99 percent of face value. Both bonds pay interest semiannually. What is the firm's weighted average aftertax cost of debt if the tax rate is 34 percent? A. 5.05 percent B. 5.12 percent C. 5.63 percent D. 5.95 percent E. 6.08 percent 10.K's Bridal Shoppe has 4,000 shares of common stock outstanding at a price of $13 a share. It also has 500 shares of preferred stock outstanding at a price of $22 a share. There are 50 bonds outstanding that have a semiannual coupon payment of $25. The bonds mature in four years, have a face value of S1,000, and sell at 98 percent of par. What is the capital structure weight of the common stock? A. 48.20 percent B. 49.68 percent C. 48.15 percent D. 46.43 percent E. 50.08 percent 11.A firm wants to create a WACC of 11.2 percent. The firm's cost of equity is 16.8 percent and its pretax cost of debt is 8.7 percent (no preferred stocks). The tax rate is 35 percent. What does the debt-equity ratio need to be for the firm to achieve its target WACC? A. .86 B. .67 C. 1.04 D. .94 E. 1.01 12.Western Electric has 21,000 shares of return of 15.6 percent. The firm has 11,000 shares of S8 preferred stock outstanding at a price of $48 a share. The outstanding debt has a total face value of $275,000 and currently sells for 104 percent of face. The yield to maturity on the debt is 8.81 percent. What is the firm's weighted average cost of capital if the of common stock outstanding at a price per share of S61 and a rate tax rate is 35 percent? A. 14.52 percent B. 13.44 percent C. 14.19 percent D. 14.37 percent E. 13.92 percent

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

Financial Modeling Using Excel And VBA

Authors: Chandan Sengupta

1st Edition

0471267686, 978-0471267683

More Books

Students also viewed these Finance questions