Highmark Solutions borrows $800,000 at an annual interest rate of 9%. The firm is subject to a 35% marginal tax rate. What is the true yearly after-tax cost of this debt (rounded to the nearest dollar)? a. $72,000 b. $46,800 c. $28,000 d. $60,000 e. Zero (because interest is deductible)
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- 2. 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 Perpetualcold Refrigeration Company (PRC) can borrow funds at an interest rate of 12.50% for a period of four years. Its marginal federal-plus-state tax rate is 25%. PRC's after-tax cost of debt is (rounded to two decimal places). At the present time, Perpetualcold Refrigeration Company (PRC) 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 PRC 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% 3.53% 2.94% 2.35%A company has a $500 000 million loan with a 7% interest rate and a $300,000 loan with an 8% rate. The company’s tax rate is 20%. Find the average interest rate, and its pretax cost of debt. And find the after-tax cost of debt.2. 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 (1-T). Western Gas & Electric Company (WGC) can borrow funds at an interest rate of 11.10% for a period of six years. Its marginal federal-plus-state tax rate is 25%. WGC's after-tax cost of debt is 8.32% (rounded to two decimal places). At the present time, Western Gas & Electric Company (WGC) 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 WGC 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.) 2.94% 2.35% 2.65% 3.38%
- ICU Window, ing, is trying to determine its cost of debt. The firm has a debt issue outstanding with 10 years to maturity that is quoted at 104.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 5.6 percent annually. What is ICU's pretax cost of debt? If the tax rate is 23 percent, what is the aftertax cost of debt?DBF borrows $3.29B by issuing 12-year bonds. ECB's cost of debt is 6.07%, so it will need to pay interest each year for the next 12 years, and then repay the principal $3.29B in year 12. ECB's marginal tax rate will remain 42.99% throughout this period. By how much does the interest tax shield increase the value of DBF? NOTE: Provide your answers in Millions. E.G. for 100M you must enter 100.0000, for 20M you must enter 20.000, etc.1. An overview of a firm's cost of debt The is the interest rate that a firm pays on any new debt financing. Cold Goose Metal Works (CGMW) can borrow funds at an interest rate of 7.30% for a period of five years. Its marginal federal-plus-state tax rate is 35%. CGMW's after-tax cost of debt is (rounded to two decimal places). At the present time, Cold Goose Metal Works (CGMW) has a series of twenty-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,181.96 per bond, carry a coupon rate of 13%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 35%. If CGMW wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? O8.04% O 8.39% O 5.59% O 6.99%
- The Flatiron Group, a private equity firm headquartered in Boulder, Colorado, borrows £5,000,000 for one year at 7.375% interest (assume annual compounding). What is the dollar cost of this debt if the pound depreciates from $2.0625/£ to $1.9460/£ over the year? Please enter your answer as % -- e.g. if your answer is 2.34% type in 2.34.The (AFTER-TAX COST OF DEBT / BEFORE-TAX COST OF DEBT) is the interest rate that a firm pays on any new debt financing. Omni Consumer Products Company (OCP) can borrow funds at an interest rate of 9.70% for a period of eight years. Its marginal federal-plus-state tax rate is 30%. OCP’s after-tax cost of debt is (7.81 / 6.79 / 9.70 / 6.45) (rounded to two decimal places). At the present time, Omni Consumer Products Company (OCP) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,229.24 per bond, carry a coupon rate of 10%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 30%. If OCP wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? _____1. 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 9.70% 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 15-year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, 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.) 5.48% 4.87% 7.00% 6.09%
- D=R-(Rx T) or D= Rx (1-T) Assume that Bob's Sporting Store borrows $100,000 at an interest rate of 7% and has a marginal tax rate of 40%. What will their actual cost of debt be?Give only typing answer with explanation and conclusionAn 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%