Answered: Outstanding debt of Tesla Inc. trades…

Outstanding debt of Tesla Inc. trades with a yield to maturity of 8%- The tax rate of Tesla Inc. is 30%. What is the effective cost of debt of Tesla Inc.? A. 5.6% B. 7.2% C. 6.8% D. 8.0%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 9P: Bond Yield and After-Tax Cost of Debt A companys 6% coupon rate, semiannual payment, 1,000 par value...

See similar textbooks

Related questions

Q: Need help with this question please answer

A: The capital gains yield is calculated using the formula:Capital Gains Yield=Initial PriceEnding…

Q: Need help

A: Debt-Equity Ratio = 65% = 0.65Sales = $1,200,000 (Not needed for ROE calculation)Net Income =…

Q: provide correct answer

A: Stock Price=PE Ratio × Earnings Per Share (EPS)Identify Given ValuesDividend per share (DPS) =…

Q: How much is Tristab's amount realized

A: Selling Price = $8,900Commission (Selling Expense) = $320Amount Realized = Selling Price - Selling…

Q: Use the Motor Vehicle Taxable Benefit table below to answer questions 16 and 17. Motor…

A: First, we need to calculate Melissa's annual salary. According to the question, Melissa Hines earned…

Q: ??

A: Step 1: DefinitionsDepreciation - Depreciation is the process of allocating the cost of a long-term…

Q: TechCo uses the straight-line method for depreciation. Assets purchased between the 1st and 15th of…

A: Definition of Straight-Line DepreciationStraight-line depreciation is a method that spreads the cost…

Q: hello tutor please help me accounting questions

A: Step 1: Definition of Return on Equity (ROE)Return on Equity (ROE) is a financial ratio that…

Q: A manufacturing company uses the weighted-average method for inventory costing. At the end of the…

A: Provided Data:Ending Work-in-Process (WIP) Inventory: 20,500 unitsMaterial Completion:…

Q: Hii, tutor give me Answer

A: Investment in new kitchen equipment = $75,000Return on investment = 10%Increase in income = 4% of…

Q: Then sales revenue should be

A: Concept of Fixed CostsFixed costs refer to the expenses that do not change with the level of…

Q: Boxwood Company sells blankets for $39 each. The following information was taken from the inventory…

A: Using FIFO, the earliest purchases are sold first.The May 10 sale of 8 units will come from the May…

Q: hello tutor please help me accounting questions

A: Step 1: Definition of Return on Common Equity (ROCE)Return on Common Equity (ROCE) measures how…

Q: please need answer correct options

A: Step 1: Definition of Contribution MarginThe Contribution Margin (CM) is the amount remaining from…

Q: help me to solve this account questions

A: Step 1: Definition of Beginning Cash BalanceThe Beginning Cash Balance is the amount of cash a…

Q: Can you help me with accounting questions

A: Step 1: Definition of Extended Accounting EquationThe extended accounting equation is a variation of…

Q: Please provide correct answer general accounting question

A: Step 1:As the note is signing on September 20,2023 for 120 days on 9% interest terms.As 120 days…

Q: What is the dividend yield on these financial accounting question not use ai?

A: Step 1: Calculation of Initial InvestmentInitial Investment = Number of Shares × Price per…

Q: In December 2019, Solar Systems Inc. management establishes the 2020 predetermined overhead rate…

A: Explanation of Predetermined Overhead Rate:Predetermined Overhead Rate (POHR) is a rate used to…

Q: Lavu's Cakes produces muffins, which sell for $6.20 each. During the current month, Lavu produced…

A: Under Variable Costing, both the variable and fixed manufacturing costs are included to calculate…

Q: None

A: Step 1: Definition of Outstanding SharesOutstanding shares refer to the number of shares that are…

Q: Need help with this financial accounting question not use ai please don't

A: Step 1: Definition of Debt-Equity RatioThe Debt-Equity Ratio is a financial metric that measures a…

Q: Compute the net income

A: Explanation of Fixed Overhead Costs: Fixed overhead costs are production-related expenses that…

Q: Don't use ai given answer general accounting question

A: Calculate the initial investment cost. The purchase price is $185 per share, and 200 shares are…

Q: Need ans financial accounting question

A: Step 1: Define Cost of Goods Sold (COGS) using Absorption CostingAbsorption Costing COGS includes…

Q: What will be total ending inventory balance?

A: Explanation of Lower-of-Cost-or-Market Rule: The lower-of-cost-or-market rule is a conservative…

Q: The lower of cost or market rule

A: Explanation of FIFO (First-In, First-Out) Method:The FIFO (First-In, First-Out) method is an…

Q: What is the gross margin?

A: Explanation of Gross Margin PercentageThe gross margin percentage measures a company's profitability…

Q: need this account subjects solutions

A: Step 1: Definition of High-Low MethodThe High-Low Method is a cost estimation technique used to…

Q: do fast answer of this financial account question

A: Step 1: Definition of Predetermined Overhead RateA predetermined overhead rate (plantwide overhead…

Q: Don't use ai given answer accounting questions

A: Step 3: Step 4:

Q: Please provide solution this financial accounting question

A: Step 1: Define Weighted Average Cost of Capital (WACC)The Weighted Average Cost of Capital (WACC) is…

Q: Not Ai Answer

A: The company earned a 10% return on its $75,000 investment, which equals $7,500. This return came…

Q: hello teacher please solve questions

A: Given Data:Sales = 12,000,000ROE = 12% = 0.12Total Assets Turnover = 4Common Equity = 40% of Total…

Q: Do fast answer of this accounting questions

A: Step 1: Definition of Break-Even Point The break-even point is the level of sales at which total…

Q: Data for the two departments of Gurley Industries for September of the current fiscal year are as…

A: Step 1: Process costing includes calculation of Equivalent units and cost per equivalent units.This…

Q: Do fast answer of this general accounting question

A: Step 1: Definition of Adjusting Entry An adjusting entry is made at the end of an accounting period…

Q: subject=general accounting

A: Step 1: Definition of Debt-to-Equity (D/E) RatioThe Debt-to-Equity (D/E) Ratio measures a company's…

Q: General accounting

A: Step 1: Define Accounting Rate of Return (ARR)The Accounting Rate of Return (ARR) is a financial…

Q: What is his effective rate of this financial accounting question?

A: Step 1: Definition of Effective Interest RateThe effective interest rate (EIR) is the interest rate…

Q: Need correct answer of this question answer general accounting

A: Step 1: Define Gross ProfitGross Profit is the amount a company earns from sales after deducting the…

Q: Presented below is information related to equipment owned by Concord Company at December 31, 2020.…

A: Step 1: Calculation of Carrying Amount :- A. Compute the Carrying Amount of Equipment :The carrying…

Q: Neztmart.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted…

A: Explanation of Activity Rate:The Activity Rate is the cost assigned to each unit of activity in an…

Q: i want to this question answer

A: Step 1: Definition of Profit MarginThe profit margin is a financial metric that shows the percentage…

Q: General accounting prblm

A: Step 1:The Material Price Variance Formula :-The material price variance (MPV) measures the…

Q: Please given answer general accounting question

A: Step 1: Define Gross Profit under LIFO MethodGross Profit (GP) is the difference between total sales…

Q: Please see an attachment for details general accounting question

A: Step 1: Define Depreciation ExpenseDepreciation Expense represents the allocation of an asset's cost…

Q: hello teacher please solve account questions

A: Step 1: Definition of Markup PercentageThe Markup Percentage is the percentage by which a company…

Q: Case B Weighted Average cannot be the following, per images:Purchases: 258840 Ending Inventory:…

A: Step 1: The question has been solved n the below pictures: 1. Working Notes: Step 2: 2.

Q: do fast answer of this account questions

A: Beginning stock price = $77.25Ending stock price = $82.18Dividend per share = $1.75Number of shares…

Question

Financial Accounting

Outstanding debt of Tesla Inc. trades with a yield to maturity of 8%-
The tax rate of Tesla Inc. is 30%. What is the effective cost of debt
of Tesla Inc.?
A. 5.6%
B. 7.2%
C. 6.8%
D. 8.0%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Outstanding debt of Home Depot trades with a yield to maturity of 6%.The tax rate of Home Depot is 30%.What is the effective cost of debt of Home Depot? A. 5.25% B. 4.2% C. 5.04% D. 4.62%
Outstanding debt of Home Depot trades with a yield to maturity of 8%. The tax rate of Home Depot is 30%. What is the effective cost of debt of Home Depot?
Yield on the debt
Ladder Works has debt outstanding with a coupon rate of 6 percent and a yield to maturity of 6.8 percent. What is the aftertax cost of debt if the tax rate is 21 percent? Assume all interest is tax deductible. 5.62% 5.82% 5.37% 4.86%
Need help with this accounting question
After tax cost of debt
Give true calculation
Xena Corp. Total Assets $21,249 Interest-Bearing Debt (market value) $11,070 Average borrowing rate for debt 10.20% Common Equity: Book Value $5,535 Market Value $23,247 Marginal Income Tax Rate 19% Market Beta 1.64 Using the information from the table, and assuming that the risk-free rate is 4.5% and the market risk premium is 6.2%, calculate Xena's weighted-average cost of capital:
Calculate the aftertax cost of debt under each of the following conditions. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a b с Yield 8.5% 14.5% 12.0% Corporate tax rate 23% 37% 43% Cost of debt % % %
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%
Subject:- finance
Coco Kitchen has a WACC of 14%. It has 19% of return on equity, and 60% of debt-to-asset ratio (i.e., weight on debt). Assume tax equals 0, calculate the interest rate on the debt. O 9.90% O 11.14% O 10.67% O 6.50%