Granny's Home Remedy has a $27 million bond issue outstanding with a coupon rate of 8.75 percent and a current yield of 8.13 percent. What is the present value of the tax shield if the tax rate is 35 percent? a. $768,285 b. $826,875 c. $839,002 d. $8,160,000 e. $9,450,000
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- If a 5 yr. AA- General Dynamics note is yielding a 35% tax bracket investor 7.56125% while a comparable maturity note from Philadelphia, Pennsylvania is yielding 4.8735%. If the inflation rate is 2.2765%, which bond would the investor prefer and why? If the marginal tax rate for the investor increases to 38.95%, which bond would the investor prefer? What is the critical tax rate?Asap plzzzzzz....You can invest in taxable bonds that are paying a yield of 9.7 percent or a municipal bond paying a yield of 7.95 percent. Assume your marginal tax rate is 21 percent. a. Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places. (e.g., 32.16))b. Which security bond should you buy?
- Jiminy's Cricket Farm issued six years ago a 30-year $1000 face value bond with an 8 percent annual coupon rate that has semiannual payments. The bond currently sells for $1,140. What is the after-tax cost of debt if the company's tax rate is 35 percent? O 4.425% 4.145% 4.955% 5.065%5) A 10-year municipal bond yields 4.8%. Your marginal tax rate (including state and federal taxes) is 27%. What interest rate on a 10-year corporate bond of equal risk would provide you with the same after-tax return? a. 3.50% b. 6.25% c. 6.58% d. 6.90%Suppose that LilyMac Photography expects EBIT to be approximately $46,000 per year for the foreseeable future, and that it has 500 10-year, 5 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?
- What is the present value of this investment? General accounting questionPDQ, Inc. expects EBIT to be approximately $12.2 million per year for the foreseeable future, and it has 100,000 20-year, 6 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.)What is the after tax cost of debt for this financial accounting question?
- (A) a Bank-backed municipal bond has yield of 10% with maturity of 18 years. Calculate its Yield ratio with this given table Name Maturity Yield Insured Municipal Bond 10 Years 7% Government Sukuk 12 years 6% Government Bond Series-19 15 Years 7% Government Bond Series-20 18 years 8% Government Bond Series-21 20 Years 9% (B) If the municipal government issues another bond with tax-backed scheme, what is the different of this tax-backed and bank-backed bond? (A) Suppose that the price of Malaysia T-Bills with 90 days to maturity and a $1 million face value is $960,000. What is the yield on a bank discount basis? (B) If the Cambodia treasury bill has 15% yield with 90 days to maturity, which T-Bill has better risk-reward? Why? (C) If the Vietnam T-Bill has 10% yield with 30 days to maturity, which T-Bill has better risk-reward? Why? Temple-Midland, Inc. is issuing a $1,000 par value bond that pays 7.5 percent annual interest and matures in 15 years. Investors are willing to pay $949 for the bond and Temple faces a tax rate of 32 percent. What is Temple's after-tax cost of debt on the bond? Question content area bottom Part 1 The after-tax cost of debt is_____%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%