A company's 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $527.14. The company's federal-plus-state tax rate is 25%. Whatis the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to one decimal place.%

Step 1: Identify Given Information Coupon Rate = 6% annually (semi-annual payments → 6% ÷ 2 = 3% per…

Answered: A company's 6% coupon rate, semiannual…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 14P

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Bond Yield and After-Tax Cost of Debt A companys 6% coupon rate, semiannual payment, 1,000 par value bond that matures in 30 years sells at a price of 515.16. The companys federal-plus-state tax rate is 40%. What is the firms after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.)
An overview of a firm's cost of debt To calculate the after-tax cost of debt, multiply the before-tax cost of debt by . Three Waters Company (TWC) can borrow funds at an interest rate of 10.20% for a period of six years. Its marginal federal-plus-state tax rate is 25%. TWC’s after-tax cost of debt is (rounded to two decimal places). At the present time, Three Waters Company (TWC) has 10-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,495.56 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If TWC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.) 3.38% 2.35% 2.94% 3.53%
1. ACT Inc. has a $1,000 (face value), 20 year bond issue selling for $1,229.40 that pays an annual coupon of 8.0 percent. Their marginal tax rate is 25%. a. What would be BAT's current before-tax component cost of debt? a. What would be BAT's current after-tax component cost of debt?
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What are the market interest rate on Coleman's debt and its component cost of debt? Coupon rate= 12% Coupons per year = 2 Years to maturity = 15 Price = $1,153.72 Tax rate = 40% The Market interest rate of debt is 10% (5% * 2) , Can you give me a step by step computation (manually) of the 5% rate? Thank you so much!
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Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 10.8% with semiannual payments, and will use an investment bank that charges $30 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices? a. $931.44 b. $1,013.16 c. $1,102.27 d. $1,152.27 ..... a. What is the cost of debt for Kenny Enterprises at a market price of $931.44? |% (Round to two decimal places.)
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 8.8% with semiannual payments, and will use an investment bank that charges $30 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices? a. $940.59 b. $1,004.38 c. $1,103.95 d. $1,162.45
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 11.2% with semiannual payments, and will use an investment bank that charges $30 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices? a. $979.18 b. $1,009.76 c. $1,111.03 d. $1,147.97 a. What is the cost of debt for Kenny Enterprises at a market price of $979.18? ☐ % (Round to two decimal places.)
Current Attempt in Progress You know that the after-tax cost of debt capital for Wildhorse Company is 18.9 percent. If the firm has only one issue of five-year bonds outstanding. Assume the bonds make semiannual coupon payments and the marginal tax rate is 30 percent. Assume the par value of the bonds is $1,000. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Problem 13.15 a1-a2 (Excel Video)(a1) Calculate the pre-tax cost of debt capital. Pre-tax cost of debt capital %
Outstanding debt of Home Depot trades with a yield to maturity of 8%. The tax rate of Home Depot is 30%. What is the effective cost of debt of Home Depot?

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