Note: Round your answers for each question as instructed. But carry your unrounded values forward to the later parts of the question where required. Planet Express has issued a 30-year, 6.4% half-yearly bond sir years ago. The bond currently sells for 97.7% of its face value. The firm's tax rate is 30.0%. A) Using the above information only, find Planet Express's pre-tax cost of debt? % per annum compounded annually (Round your answer to two decimal places) Suppose the book value of the above Planet Express coupon bond issue is $75.0 million. In addition, the company has a second debt issue, a zero-coupon bond with seven years left to maturity; the book value of this issue is $63.0 million, and it sells for 50.9% of par. B) Find the yield on Planet Express's zero-coupon bond as an EAR. (Round your answer to two decimal places) C) Given all of the above information, what is the overall pre-tax cost of debt for Planet Express now? (Round your answer to two decimal places) Assume that Planet Express has common equity with a cost of 16,5% per annum and a market value of $95.0 million. In addition, assume that they have a preference share issue with a cost of 12.7% per annum and that trades for a market value of $24.0 million- D) Find the WACC for Planet Express (assuming they operate under a classical taxation system). (Round your answer to two decimal places)
Note: Round your answers for each question as instructed. But carry your unrounded values forward to the later parts of the question where required. Planet Express has issued a 30-year, 6.4% half-yearly bond sir years ago. The bond currently sells for 97.7% of its face value. The firm's tax rate is 30.0%. A) Using the above information only, find Planet Express's pre-tax cost of debt? % per annum compounded annually (Round your answer to two decimal places) Suppose the book value of the above Planet Express coupon bond issue is $75.0 million. In addition, the company has a second debt issue, a zero-coupon bond with seven years left to maturity; the book value of this issue is $63.0 million, and it sells for 50.9% of par. B) Find the yield on Planet Express's zero-coupon bond as an EAR. (Round your answer to two decimal places) C) Given all of the above information, what is the overall pre-tax cost of debt for Planet Express now? (Round your answer to two decimal places) Assume that Planet Express has common equity with a cost of 16,5% per annum and a market value of $95.0 million. In addition, assume that they have a preference share issue with a cost of 12.7% per annum and that trades for a market value of $24.0 million- D) Find the WACC for Planet Express (assuming they operate under a classical taxation system). (Round your answer to two decimal places)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Note: Round your answers for each question as instructed. But carry your unrounded values forward to the later parts of the question where required.
Planet Express has issued a 30-year, 6.4% half-yearly bond six years ago. The bond currently sells for 97.7% of its face value. The firm's tax rate is 30.0%.
A) Using the above information only, find Planet Express's pre-tax cost of debt?
% per annum compounded annually
(Round your answer to two decimal places)
Suppose the book value of the above Planet Express coupon bond issue is $75.0 million. In addition, the company has a second debt issue, a zero-coupon bond with seven years left to maturity;
the book value of this issue is $63.0 million, and it sells for 50.9% of par.
B) Find the yield on Planet Express's zero-coupon bond as an EAR.
(Round your answer to two decimal places)
C) Given all of the above information, what is the overall pre-tax cost of debt for Planet Express now?
(Round your answer to two decimal places)
Assume that Planet Express has common equity with a cost of 16.5% per annum and a market value of $95.0 million. In addition, assume that they have a preference share issue with a cost
of 12.7% per annum and that trades for a market value of $24.0 million-
D) Find the WACC for Planet Express (assuming they operate under a classical taxation system).
(Round your answer to two decimal places)
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