KatyDid Clothes has a $150 million (face value) 30-year bond issue selling for 104 percent of par that carries a coupon rate of 11 percent, paid semi-annually.  What would be Katydid's before-tax component cost of debt?

Q: How low does the market interest rate need to drop to justify refunding with a new bond issue?

A: Step 1 NPV is employed in capital budgeting and investment going to analyze the gain of a projected…

Q: KatyDid Clothes has a $130 million (face value) 20-year bond issue selling for 102 percent of par…

A: FV = 130 N  = 40 (20*2) PV = 132.60 (130*102%) Pmt = 6.50 (130*10%/2)

Q: The following is the information on debt issued by Huntington Power Co. Calculate the after-tax cost…

A: Interest on debt is a tax deductible expense, that's why after tax cost of debt is taken.

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A: Calculation of the after tax Kd (cost of debt) is shown below: Hence, the after tax Kd is 7.00%.

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A: Yield to maturity can be calculated by following function in excel=RATE (nper, pmt, pv, [fv],…

Q: DQ, Inc. expects EBIT to be approximately $11.4 million per year for the foreseeable future, and it…

A: EBIT - $11.40 million Bond :no of bonds- 20,000 Interest rate -10% Face value - $1000 Annual…

Q: selling for $960. If the firm's tax rate is 40%, what would be the after-tax cost of issuing new d…

A: Bonds are issued by corporations to raise money for future long term projects bonds are very cheap…

Q: KatyDid Clothes has a $150 million (face value) 30-year bond issue selling for 104 percent of par…

A: Cost of debt is the yield to maturity of the bond, this is can be determined as the rate of return…

Q: Several years ago, the Jakobe Company issued a $1,000 par value, non-callable bond that now has 20…

A: Compound = semiannually = 2Face value = fv = $1000Time = nper = 20 * 2 = 40 Coupon rate = 1/2 =…

Q: The Holmes Company's currently outstanding bonds have a 7% coupon and a 13% yield to maturity.…

A: After tax cost of debt = Before tax cost of debt * (1-tax rate)

Q: Several years ago the Jakobe Company issued a $1,000 par value, non-callable bond that now has 20…

A: In the given question we need to compute the after-tax cost of debt for use in the WACC calculation.…

Q: Gerald Morris Corporation (GM) plans to issue bonds to raise $95 million. GM's investment banker…

A: First, we need to calculate the total amount that GM needs to raise, including the flotation costs.…

Q: Bayside Inc. sells $5,000,000 of five-year, 10% bonds at the start of the year.  The bonds pay…

A: Value of Bonds=$5,000,000  Coupon rate=10% Years to maturity=5 years Effective yield=9% Bond…

Q: Jiminiys cricket farm issued a 30 year.8 percent semiannual bond 3 years ago.the bond currently…

A: Pretax cost of debt is YTM of the bond

Q: atyDid Clothes has a $170 million (face value) 20-year bond issue selling for 104 percent of par…

A: Yield to maturity(YTM) is the rate of return that investor will get if hold bond till maturity and…

Q: Avicorp has a $14.3 million debt issue outstanding, with a 5.9% coupon rate. The debt has…

A: A bond is a kind of debt security issued by the government and private companies for raising funds…

Q: The H-mart’s currently outstanding  6 percent annual coupon bonds have maturity of 20 years with par…

A: Annual coupon rate is 6% Maturity is 20 years Par value is $1,000 Current price of bond is $850 Tax…

Q: The Besson Co. is going to issue a twenty-year 8% (annual) coupon bond making semi-annual coupon…

A: Yield to maturity (YTM) is the rate of return that the bond provides to its holders if its held till…

Q: Sony bonds were issued 8 years ago with a coupon rate of 9%. The bond has 2 years left to maturity…

A: A bond is a financial instrument that is issued by a corporation in the financial markets. Bonds are…

Q: Beckham Corporation has semiannual bonds outstanding with 15 years to maturity and the bonds are…

A: Bonds are debt instruments issued by companies. The issuing company pays periodic coupons to the…

Q: A company is issuing a 15-year bond with 12 percent coupon rate, $1,000 par value, $970 selling…

A: Time = n = 15 YearsCoupon Rate = c = 12%Face Value = fv = $1000Current Price of Bond = pv =…

Q: Joliet Company is planning to issue $1,000 par value bonds that have a coupon rate of 9.6%.  The…

A: using financial calculator, N= no. of periods  N= 15*2 = 30 PMT = coupon payment PMT = 1000*9.6%/2 =…

Q: If the company’s tax rate is 28%, what component cost of debt should be used in the WACC…

A: Information Provided: Years to maturity = 15 years Coupon rate = 5% semi-annually Price = $985 Par…

Q: Sabine Co has outstanding bonds with 10 years remaining until maturity, a coupon rate of 7%,…

A: Data given: Coupon rate=7% (semi-annual) N=10 years Par value=$1000 Market price=$1000 * 96.5%=$965…

Q: Lululemon needs to raise $115 million and wants to issue 20-year zero-coupon bonds for this purpose.…

A: Amount need to be raise = $115 million Time = t = 20 years Required rate of return = r = 5.4% Face…

Q: Jones Cricket Institute issued a 30 year, 8 percent   semi-annual bond   3 year ago. The bond…

A: Note: As per the policy, we are supposed to solve the first three subparts only. Kindly repost the…

Q: Harbor Inc. wants to raise $80 million by issuing 10-year zero-coupon bonds at an annual interest…

A: Bonds are instruments of debt. They are used to raise capital and have a fixed cost of interest…

Q: What is the company's after-tax cost of debt?

A: Face value = 1000Price = 1179.65 N = 10 years Annual coupon rate = 4%/100 = 0.04 in decimalCoupon =…