Question
In: Finance
Avicorp has a $12.8 million debt issue outstanding, with a 5.9% coupon rate. The debt has...
Avicorp has a $12.8 million debt issue outstanding, with a 5.9%
coupon rate. The debt has semi-annual coupons, the next coupon is
due in six months, and the debt matures in five years. It is
currently priced at 93% of par value. **Answer MUST be rounded to
FOUR decimal places**
a. What is Avicorp's pre-tax cost of debt? Note: Compute the
effective annual return. ROUND TO 4 DECIMAL PLACES
b. If Avicorp faces a 40% tax rate, what is its after-tax cost
of debt? ROUND TO 4 DECIMAL PLACES
Note: Assume that the firm will always be able to utilize its full
interest tax shield.
(Please show work, a plus if shown in Excel with formulas shown!)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Avicorp has a $ 14.6 million debt issue outstanding, with a 5.9 % coupon rate. The...
Avicorp has a $ 14.6 million debt issue outstanding, with a 5.9
% coupon rate. The debt has semi-annual coupons, the next coupon
is due in six months, and the debt matures in five years. It is
currently priced at 93 % of par value.
a. What is Avicorp's pre-tax cost of debt? Note: Compute the
effective annual return.
b. If Avicorp faces a 40 % tax rate, what is its after-tax
cost of debt? Note: Assume that the firm...
Avicorp has a $14.4 million debt issue outstanding, with a 5.9% coupon rate. The debt has...
Avicorp has a
$14.4
million debt issue outstanding, with a
5.9%
coupon rate. The debt has semi-annual coupons, the next coupon
is due in six months, and the debt matures in five years. It is
currently priced at
96%
of par value.
a. What is Avicorp's pre-tax cost of debt? Note: Compute the
effective annual return.
b. If Avicorp faces a
40%
tax rate, what is its after-tax cost of debt?
Note: Assume that the firm will always be able...
Avicorp has a $ 10.3 million debt issue outstanding, with a 6.1 % coupon rate. The...
Avicorp has a
$ 10.3
million debt issue outstanding, with a
6.1 %
coupon rate. The debt has semi-annual coupons, the next coupon
is due in six months, and the debt matures in five years. It is
currently priced at
94 %
of par value.
a. What is Avicorp's pre-tax cost of debt? Note: Compute the
effective annual return.
b. If Avicorp faces a
40 %
tax rate, what is its after-tax cost of debt?
Note: Assume that the firm...
Avicorp has a $12.3 million debt issue outstanding, with a 6.2% coupon rate. The debt has...
Avicorp has a $12.3 million debt issue outstanding, with a 6.2%
coupon rate. The debt has semi-annual coupons, the next coupon is
due in six months, and the debt matures in five years. It is
currently priced at 95% of par value.
a. What is Avicorp's pre-tax cost of debt? Note: Compute the
effective annual return.
b. If Avicorp faces a
40%
tax rate, what is its after-tax cost of debt?
Note: Assume that the firm will always be able...
Avicorp has a $13.9 million debt issue? outstanding, with a 6.2% coupon rate. The debt has?...
Avicorp has a $13.9 million debt issue? outstanding, with a 6.2%
coupon rate. The debt has? semi-annual coupons, the next coupon is
due in six? months, and the debt matures in five years. It is
currently priced at 93% of par value. a. What is? Avicorp's pre-tax
cost of? debt? Note: Compute the effective annual return. (Round to
4 decimal places) b. If Avicorp faces a 40% tax? rate, what is its?
after-tax cost of? debt?
ABC Corp. is going through a dissolution. It has assets of $12.8 million and outstanding debt...
ABC
Corp. is going through a dissolution. It has assets of $12.8
million and outstanding debt of $14.6 million owed to its
bondholders and other creditors. How much will the common
stockholders receive and how much will the creditors receive?
Explain.
4) PVE, Inc. has $15 million of debt outstanding with a coupon rate of 9%. Currently,...
4) PVE, Inc. has $15 million of debt outstanding with a coupon
rate of 9%. Currently, the yield to maturity on these bonds is 7%.
If the firm's tax rate is 35%, what is the after-tax cost of debt
to PVE?
A) 10.76%
B) 5.85%
C) 4.55%
D) 5.4%
5) The expected dividend is $2.50 for a share of stock priced at
$25. What is the cost of common equity if the long-term growth in
dividends is projected to be...
A) The coupon rate on a debt issue is 8%. If the yield to maturity on...
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41%?
a. 3.96%
b. 5.31%
c. 7.46%
d. 6.66%
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There is two months overlap, and Pygmalion’s tax rate is 36%, cost
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A firm has an outstanding debt with a coupon rate of 55%, seven years maturity, and...
A firm has an outstanding debt with a coupon rate of 55%, seven
years maturity, and a price of $1000 per $1000 face value. What
is the after-tax cost of debt if the marginal tax rate of the firm
is 30%?
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