What would be the solution to the image attached? **Problem Statement:**Apple's 9 percent annual coupon bond has 10 years until maturity, and the bonds are selling in the market for $890. The firm's tax rate is 21 percent. What is the firm's after-tax cost of debt?**Multiple Choice Options:**- 9.81 percent- 3.91 percent- 8.58 percent- 10.86 percent**Explanation:**The question asks for the calculation of the after-tax cost of debt, which is influenced by the coupon rate, current bond price, maturity, and the firm's tax rate. The choices provided are possible answers based on these financial variables. Each percentage represents a potential after-tax yield that the company incurs as a cost for its debt.

The Yield to maturity of the bond is considered as the pre tax cost of bond. The pre tax cost of the…

Apple's 9 percent annual coupon bond has 10 years until maturity and the bonds are selling in the market for $890. The firm's tax rate is 21 percent. What is the firm's after-tax cost of debt? Multiple Choice 9.81 percent 3.91 percent 8.58 percent 10.86 percent

Apple's 9 percent annual coupon bond has 10 years until maturity and the bonds are selling in the market for $890. The firm's tax rate is 21 percent. What is the firm's after-tax cost of debt? Multiple Choice 9.81 percent 3.91 percent 8.58 percent 10.86 percent

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

Kindly answer using the formula: Monster Limos plans to issue new bonds that have the same yield as its existing bonds, which have a coupon rate of interest equal to 4 percent (paid semiannually), eight years remaining until maturity, and a $1,000 maturity value. The existing bonds are currently selling for $886 each. What should be the coupon rate for the new bonds? If the firm’s marginal tax rate is 40 percent, what will be the after-tax cost of debt associated with the new debt (bonds)?
You are analyzing the after-tax cost of debt for a firm. You know that the firm's 12-year maturity, 11.00 percent semiannual coupon bonds are selling at a price of $1,229. Assuming that these bonds are the only debt outstanding for the firm. Problem 13.19 a1-a3(a1) Your answer is correct. What is the current YTM of the bonds? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) YTM eTextbook and Media Problem 13.19 a1-a3(a2) Your answer is incorrect. 8 % After-tax cost of debt What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? (Round final answer to 2 decimal places, e.g. 15.25%.) Attempts: 1 of 3 used %
Answer
Q1: Suppose your company needs to raise $10 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 9 percent, and you’re evaluating two issue alternatives, a 9 percent annual coupon bond and a zero coupon bond. Your company's tax rate is 35 percent. a) How many of the coupon bonds would you need to issue to raise the $10 million? How many of the zero coupon bonds would you need to issue? b) In 30 years, what will your company's repayment be if you issue the coupon bonds? What if you issue the zero coupon bonds? c) Based on your answers in (a) and (b), why would you ever want to issue the zeroes? To answer, calculate the firm's after tax cash outflows for the first year under the two different scenarios.
What should be the coupon rate on the new bond issue? Round your answer to one decimal place. _______ % What is Global's after-tax cost of debt? Round your answer to one decimal place. _______ %
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 %
Please don't use Ai solution
mni.3 answer must be in proper format or i will give dislike
Current Attempt in Progress You know that the after-tax cost of debt capital for Oriole Company is 15.4 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
Inventive Response has bonds outstanding that mature in 8.5 years, have a 4 percent coupon, and pay interest annually. These bonds have a face value of $1,000 and a current market price of $1,180.30. What is the company’s after-tax cost of debt if its tax rate is 21 percent? 1.35 percent 1.70 percent 2.15 percent 2.65 percent 3.40 percent
Need Answer please
Question 9, please help. Thank you!