Problem 14-22 Calculating the Cost of Debt [LO2] Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. Coupon Bond 1 Rate Price Quote Maturity 6.1% 106.06 5 years Face Value $41,000,000 2 7.6 114.62 8 years 36,000,000
Problem 14-22 Calculating the Cost of Debt [LO2] Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. Coupon Bond 1 Rate Price Quote Maturity 6.1% 106.06 5 years Face Value $41,000,000 2 7.6 114.62 8 years 36,000,000
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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![Problem 14-22 Calculating the Cost of Debt [LO2]
Ying Import has several bond issues outstanding, each making semiannual interest
payments. The bonds are listed in the following table.
Coupon
Bond
Rate
Price Quote
Maturity
Face Value
1
6.1%
106.06
5 years
$ 41,000,000
234
7.6
114.62
8 years
36,000,000
7.3
113.17
15.5 years
56,000,000
6.9
102.41
25 years
63,000,000
If the corporate tax rate is 21 percent, what is the aftertax cost of the company's debt?
(Do not round intermediate calculations and enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
Cost of debt
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48daf3b6-4039-44ea-9ed6-c1364bbb5763%2F4e05b903-290a-477d-a444-e7d839c90a9b%2Fdwbr9hn_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 14-22 Calculating the Cost of Debt [LO2]
Ying Import has several bond issues outstanding, each making semiannual interest
payments. The bonds are listed in the following table.
Coupon
Bond
Rate
Price Quote
Maturity
Face Value
1
6.1%
106.06
5 years
$ 41,000,000
234
7.6
114.62
8 years
36,000,000
7.3
113.17
15.5 years
56,000,000
6.9
102.41
25 years
63,000,000
If the corporate tax rate is 21 percent, what is the aftertax cost of the company's debt?
(Do not round intermediate calculations and enter your answer as a percent rounded
to 2 decimal places, e.g., 32.16.)
Cost of debt
%
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