The outstanding debt of Home Depot trades with a yield to maturity of 10%. The tax rate of Home Depot is 30%. What is the effective cost of debt of Home Depot? A) 8.05% B) 10% C) 7% D) 7.35%
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What is the effective cost of debt of Home Depot on these financial accounting question?
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- Pogo Stick Co can issue debt yielding 10 percent. The company is paying at a 40 percent tax rate. What is the aftertax cost of debt? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Cost of debt %Financial AccountingCalculate the cap rate using the following information. NOI is $10,000. Acquisition price is $100,000. Mortgage expense is $3,000. Utility expense is $4,000. Selling cost is $12.000. A. 12% B. 7% C. 4% D. 10%
- 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%What is the actual debt service coverage ratio on these financial accounting question?a. Abc Investment Ltd., plans to borrow Ghc100,000 for a 90-day period from Lloyds Finance Company. Abc investment would repay the principal amount plus Ghc5,000 interest at maturity. Determine and calculate the Annual Percentage Rate of the credit to Abc Company Ltd. b. Belinda Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The company’s current assets consist of inventory and trade receivables. Current liabilities consist of accounts payables and an overdraft facility with an average interest rate of 10% per annum. The company gives 60 days credit to its customers and is allowed an average of 30 days credit by trade suppliers. The company has an operating cycle of 90 days. Other relevant information: Current ratio of Ait Ltd 1.5:1 Cost of long-term finance to Ait Ltd is 12% per annum Required: Calculate the, (i) Size of the overdraft of Ait Ltd (ii) Net working capital of the company (iii) Total cost of financing its current assets c.…
- Debt Service Coverage Ratio (DSCR or DCR): Assume that a property has a monthly net operating income (NOI) of $25,000, and that a lender has a minimum DSCR requirement of 1.35. What is the maximum loan that you could obtain assuming a 4.5% interest rate and a 30-year term with monthly payments?Consider the following values. NOIn+1: $2.8 million. Cap rate: 7.5%. Brokerage commission: 3%. Remaining mortgage balance: $12 million. Remaining book value: $14 million. Total depreciation taken: $4.9 million. Recapture tax (for depreciation taken): 25%. Tax on capital gain: 20%. What is the after-tax cash flow from the sale? Excel Link: Excel Sheet.xlsx $12,870,667 $19,525,667 $19,770,667 $24,213,333Diamond Company's cost of debt financing is 10%. Its tax rate is 35%. Diamond has $3,000,000 of debt. Required: Calculate the after-tax cost amount of interest expense.
- A company borrows $100,000 with interest at j₁2 = 9%. The loan is to be amortized by monthly payments of $1550 for as long as necessary. A final smaller payment will be calculated so the loan will be exactly repaid. The outstanding balance immediately after the th th 88 payment is $796.44. What is the value of the 89" and final payment? O A. $790.51 B. $796.44 C. $802.41 D. $808.43From the following details, calculate interest coverage ratio: Net Profit after tax Rs. 60,000; 15% Long-term debt 10,00,000; and Tax rate 40%Suppose that $100,000 is borrowed at 8 percent and is to be repaid in three equal annual installments. Prepare a debt amortization table and show that the net present value of the after-tax cash flows of the debt is zero using the after-tax cost of debt as the discount rate. The tax rate is 40 percent.