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 8.7% withsemiannual payments, and will use an investment bank that charges $25 per bond for its services. What is the cost of debt for Kenny Enterprises atfollowing market prices?a. $922.13b. $1,004.64c. $1,128.39d. $1,176.87

To calculate the cost of debt with fees for Kenny Enterprises, we'll need to take into account the…

Answered: Cost of debt with fees. Kenny…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 16P

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Cost of debt. Kenny Enterprises has just issued a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 10.5% with semiannual payments. What is the cost of debt for Kenny Enterprises if the bond sells at the following prices? What do you notice about the price and the cost of debt? a. b. $1,000.00 c. $1,036.72 d. $1,161.82 $977.21
Cost of debt. Kenny Enterprises has just issued a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 10.2% with semiannual payments. What is the cost of debt for Kenny Enterprises if the bond sells at the following prices? What do you notice about the price and the cost of debt? a. $938.10 b. $1,000.00 c. $1,041.98 d. $1,187.22 ..... a. What is the cost of debt for Kenny Enterprises if the bond sells at $938.10? % (Round to two decimal places.)
Cost of debt. Kenny Enterprises has just issued a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 10.7% with semiannual payments. What is the cost of debt for Kenny Enterprises if the bond sells at the following prices? What do you notice about the price and the cost of debt? a. $967.34 b. $1,000.00 c. $1,045.83 d. $1, 189.10% (Round to two decimal places.)
Home Depot has debt outstanding with a face value of $30 billion. The coupon rate on these bonds is 6.2%. The current yield-to-maturity (YTM) on these bonds is 7.8%. Home Depot's tax rate is 26%. What is the effective cost of debt of Home Depot? OA. 9.83% OB. 6.20% OC. 4.59% OD. 5.77% OE. 7.80%
Suppose Federal National Mortgage Association sells mortgage-backed securities (MBS) backed by a fixed-rate mortgage portfolio having the following features: Current mortgage balance $300,000,000 Weighted average coupon rate (WAC) = 6% Weighted average maturity (WAM) = 360 months Current prepayment speed = 300 PSA %3D Pass-through rate (PT Rate) = 5.4% What is the amount of total cash flows that the investors of the agency MBS receive in Month 2? Oa. $1,948,883.93 O b. $1,948,915.93 O c. $1,798,915.93 O d. $2,098,659.47
If the interest rates go up by 1%, using the duration and convexity rule to determine the net worth of the bank and the equity to asset ratio
Doha plc has some surplus funds that it wishes to invest in bonds. The company requires a return of 15% on bonds, and the finance director has asked you to analyse whether it should invest in either of the following bonds that are available:Company A: Expected profit 12% bonds, redeemable at par at the end of two more years, with a current market value of QAR 95 per QAR 100 bondCompany B: Expected profit 8% bonds, redeemable at QAR110 at the end of two more years, with a current market value of QAR 95 per QAR 100 bonda. Calculate the expected value (price) of the two bonds and evaluate if either offer an appropriate return for Doha Plc.b. Critically evaluate what would be the impact on the price of bonds if Doha Plc reduces their required return.c. Critically evaluate and discuss the factors that should be considered by the directors of a company when choosing whether to use debt or equity finance for a new projectd. Recently one director has attended a finance conference, on their…
Qq.61. Subject :- Finance
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Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 9% coupon rate. Because current market rates for similar bonds are just under 9%, Warren can sell its bonds for $1,090 each; Warren will incur flotation costs of $30 per bond. The firm is in the 28% tax bracket. a. Find the net proceeds from the sale of the bond, NJ. b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. a. The net proceeds from the sale of the bond, Ng, is $. (Round to the nearest dollar.)
Michalleti Marketing Consulting Ltd issued Gh¢500million of zero-coupon bonds with ex-interest of Gh¢120, due for repayment in 5years time at par. Its current market price is Gh¢105. What is the company’s cost of debt capital? plZ help me sir urgently
You are analyzing the cost of debt for a firm. You know that the firm’s 14-year maturity, 6.60 percent coupon bonds are selling at a price of $825.00. The bonds pay interest semiannually. If these bonds are the only debt outstanding, answer the following questions: What is the current YTM of the bonds?

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