The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%. Introduction: Cost of debt (K d ): It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

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Answer 1

Question

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

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The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 9 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 15 percent higher; that is, firms that paid 11 percent for debt last year will be paying 12.65 percent this year. a. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on Its cost last year and the 15 percent increase? Note: Do not round Intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Aftertax cost of debt % b. If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be? Note: Do not round Intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Aftertax cost of debt %

The Goodsmith Charitable Foundation, which is tax-exempt, issued debt last year at 10 percent to help finance a new playground facility in Los Angeles. This year the cost of debt is 30 percent higher; that is, firms that paid 12 percent for debt last year will be paying 15.60 percent this year. If the Goodsmith Charitable Foundation borrowed money this year, what would the aftertax cost of debt be, based on their cost last year and the 30 percent increase? (Do not round intermediate calculations. Input the answer as a percent rounded to 2 decimal places.) If the receipts of the foundation were found to be taxable by the IRS (at a rate of 35 percent because of involvement in political activities), what would the aftertax cost of debt be? (Do not round intermediate calculations. Input the answer as a percent rounded to 2 decimal places.)

Please answer both if possible

Answer 2

Question

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

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Answer 3

Question

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Expert Solution & Answer

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Answer 4

Question

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Answer 6

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Answer 7

Chapter 11, Problem 7P

a.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Answer 8

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Answer 9

b.

Summary Introduction

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if receipts are taxable at the rate 34% by the IRS.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%. Introduction: Cost of debt (K d ): It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%. Introduction: Cost of debt (Kd): It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.

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Chapter 11 Solutions

To calculate: The cost of debt after tax for Goodsmith Charitable Foundation if debt is increased by 25%.

Introduction:

Cost of debt (Kd):

It refers to the effective interest rate paid by a company on its debt, such as bonds and loans. Such interest payments are tax deductible.