Delayed Exports has four bonds outstanding. If the relevant tax rate is 35 percent, what is...

Delayed Exports has four bonds outstanding. If the relevant tax rate is 35 percent, what is the after-tax cost of Delayed Exports' debt ? (Do not round your intermediate calculations.)

Bond	Coupon Rate	Yield to Maturity	Price Quote (% of Face Value)	Maturity	Face Value
1	6.50%	6.30%	101	6 years	$ 25,000,000
2	7.60%	6.01%	110	8 years	$ 41,000,000
3	6.70%	6.42%	103	18 years	$ 45,000,000
4	7.70%	6.55%	115	30 years	$ 56,000,000

Expert Solution


		Weight Average Cost =SUMof( Weight* Yield tomaturity)

		A	B	C	D	E	F=C*E	G=F/181100000	H=B*G
	Bond	Coupon Rate	Yield to Maturity	Price Quote (% of Face Value)	Maturity	Face Value	Market Value	Weight	Yield *Weight
	1	6.50%	6.30%	101%	6 years	$25,000,000	$25,250,000	0.1394	0.88%
	2	7.60%	6.01%	110%	8 years	$41,000,000	$45,100,000	0.2490	1.50%
	3	6.70%	6.42%	103%	18 years	$45,000,000	$46,350,000	0.2559	1.64%
	4	7.70%	6.55%	115%	30 years	$56,000,000	$64,400,000	0.3556	2.33%
						TOTAL	$181,100,000	1.00	6.35%
Before tax cost of Debt	6.35%
After tax cost of debt =6.35*(1-Tax Rate)	4.13%	6.35*(1-0.35)

jeff jeffy answered 1 year ago

Sandhill, Inc., has four-year bonds outstanding that pay a coupon rate of 7.50 percent and make...

Sandhill, Inc., has four-year bonds outstanding that pay a coupon rate of 7.50 percent and make coupon payments semiannually. If these bonds are currently selling at $918.89. What is the effective annual yield? (Round answer to 1 decimal place, e.g. 15.2%.) Effective annual yield: I got 8.2% but it is wrong

Oriole, Inc., has four-year bonds outstanding that pay a coupon rate of 6.20 percent and make...

Oriole, Inc., has four-year bonds outstanding that pay a coupon rate of 6.20 percent and make coupon payments semiannually. If these bonds are currently selling at $920.89. What is the yield to maturity that an investor can expect to earn on these bonds? (Round answer to 1 decimal place, e.g. 15.2%.) Yield to maturity % What is the effective annual yield? (Round answer to 1 decimal place, e.g. 15.2%.) Effective annual yield % Click if you would like to Show...

Blossom, Inc., has four-year bonds outstanding that pay a coupon rate of 8.00 percent and make...

Blossom, Inc., has four-year bonds outstanding that pay a coupon rate of 8.00 percent and make coupon payments semiannually. If these bonds are currently selling at $911.89. What is the yield to maturity that an investor can expect to earn on these bonds? (Round answer to 1 decimal place, e.g. 15.2%.) Yield to maturity % What is the effective annual yield? (Round answer to 1 decimal place, e.g. 15.2%.) Effective annual yield %

Pharoah, Inc., has four-year bonds outstanding that pay a coupon rate of 7.10 percent and make...

Pharoah, Inc., has four-year bonds outstanding that pay a coupon rate of 7.10 percent and make coupon payments semiannually. If these bonds are currently selling at $917.89. What is the yield to maturity that an investor can expect to earn on these bonds? (Round answer to 1 decimal place, e.g. 15.2%.) What is the effective annual yield? (Round answer to 1 decimal place, e.g. 15.2%.)

The Sunbelt Corporation has $35 million of bonds outstanding that were issued at a coupon rate...

The Sunbelt Corporation has $35 million of bonds outstanding that were issued at a coupon rate of 11.275 percent seven years ago. Interest rates have fallen to 10.75 percent. Mr. Heath, the Vice-President of Finance, does not expect rates to fall any further. The bonds have 18 years left to maturity, and Mr. Heath would like to refund the bonds with a new issue of equal amount also having 18 years to maturity. The Sunbelt Corporation has a tax rate...

Country Markets has an unlevered cost of capital of 11.45 percent, a tax rate of 35...

Country Markets has an unlevered cost of capital of 11.45 percent, a tax rate of 35 percent, and expected earnings before interest and taxes of $18,700. The company has $11,000 in bonds outstanding that have an 8 percent coupon and pay interest annually. The bonds are selling at par value. What is the value of WACC?

Given the following information about the company: Tax: the company’s tax rate is 35 percent. Debt:...

Given the following information about the company: Tax: the company’s tax rate is 35 percent. Debt: 9,000 of 6.5 percent coupon bonds outstanding, $1000 par value, 25 years to maturity, selling for $1,060, the bonds make semiannual payments. Common Stock: 350,000 shares outstanding, selling for $57 per share; the Beta is 1.05. Preferred stock: 15,000 shares of preferred stock outstanding, currently selling for $72 per share. The preferred stock pays an annual fixed dividend of $4. Market: 7 percent market...

Union Local School District has bonds outstanding with a coupon rate of 5.2 percent paid semiannually...

Union Local School District has bonds outstanding with a coupon rate of 5.2 percent paid semiannually and 19 years to maturity. The yield to maturity on these bonds is 4.7 percent and the bonds have a par value of $5,000. What is the dollar price of each bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

D Corporation has three bonds outstanding. All three have a coupon rate of 9 percent and...

D Corporation has three bonds outstanding. All three have a coupon rate of 9 percent and a $1000 par value. The first bond has one year left to maturity. The second bond has 4 years left to maturity. The last bond has 8 years left to maturity. Assume for simplicity that the market rate for all three bonds is now 5 percent. What is the value for the first bond with one year left to maturity? ___________ What is the...

Day Shades Inc. (DSI) has 20,000 bonds issued and outstanding with a 10 percent coupon rate...

Day Shades Inc. (DSI) has 20,000 bonds issued and outstanding with a 10 percent coupon rate compounded semi-annually. These bonds have 13 years left to maturity and they currently sell for 104 percent of par value. The company has 5 million shares issued and outstanding with a market value of $3.85 per share. The company’s stock has a beta of 1.20. The expected return on the market is 11 percent and the yield on the risk-free asset is currently 6...

Question