Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Understood A but need help with B and C Keyspan Corp is planning to issue debt that will mature in 2033. In many respects, the

image text in transcribedUnderstood A but need help with B and C

Keyspan Corp is planning to issue debt that will mature in 2033. In many respects, the issue is similar to the currently outstanding debt of the corporation. Use table 11-3

A. Calculate the yield to maturity on similarly outstanding debt for the firm in terms of maturity.

answer yield 4.25%

Need help with B. Assume the new debt will be issued at par. the required yield to maturity will be 0.25 percent higher than the value determined in part a.

What is the new yield to maturity? ( do not round intermediatate calculations. Input your anser as a percent rounded to 2 decimal places._________

Need help with C. If the firm is in a 25 percent tax bracket, what is the after tac, cost of debt for the yeild determined in part b?

Aftertax cost of debt____________

Maturity Date Nov-15-2030 Apr-01-2033 Apr-01-2035 Issue KeySpan Corporation KeySpan Corporation KeySpan Corporation Security Type Corporate Debentures Corporate Debentures Corporate Debentures Seniority Senior Unsecured Senior Unsecured Senior Unsecured Coupon 8.000 5.875 5.803 Offer Date Nov-15-2000 Apr-01-2003 Mar-29-2005 Amt.Outstdg. Current (mm) Price 250.00 131.285 150.00 117.973 307.20 117.973 Current YTM 4.710 4.250 4.021 S&P Rating BBB+ BBB+ BBB+

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

Corporate Treasury And Cash Management

Authors: Robert Cooper

1st Edition

1349512699, 9781349512690

More Books

Students also viewed these Finance questions

Question

Prepare an adjusting entry for an accrued expense.

Answered: 1 week ago