Question
In: Finance
3. Calculate the cost of debt for They currently have outstanding 30 year, 8%, bonds that...
3. Calculate the cost of debt for They currently have outstanding 30 year, 8%, bonds that were issued 12 years ago. The company has 5,000 bonds outstanding that are currently selling for 89% of their face value. pays 34% of income in taxes.
Solutions
jeff jeffy answered 5 months agoRelated Solutions
Debt: 30,000 bonds outstanding currently trading at $950 per bond. The bonds have a 5.65% coupon...
Debt: 30,000 bonds outstanding currently trading at $950 per
bond. The bonds have a 5.65% coupon rate that pays semi-annually.
The bond has 20 years remaining to maturity.
Preferred Stock: 100,000 shares of preferred stock that pays
$6.60 per share dividend and is currently trading for $90 per
share.
Common Stock: 1,400,000 shares with current market price of $76
per share. The firm is expected to pay $4.55 per share dividend
next year, the growth rate is 5.80%. The market...
BEEber Inc. currently has 10,000 bonds outstanding. The bonds have a coupon rate of 8%, paid...
BEEber Inc. currently has 10,000 bonds outstanding. The bonds
have a coupon rate of 8%, paid semi-annually, mature in 10 years,
and are trading at $985 each. BEEber’s common stock currently sells
for $20 per share and there are 750,000 shares outstanding.
The risk-free rate is 4.5%, the expected return on the market is
15%, and BEEber’s beta is equal to 2.0. The corporate tax rate is
40%. What is BEEber’s WAC?
ABC Inc.’s currently outstanding 9% coupon bonds have a yield to maturity of 8%. ABC believes...
ABC Inc.’s currently outstanding 9% coupon bonds have a
yield to maturity of 8%. ABC believes it could issue new bonds at
par that would provide a similar yield to maturity. If its marginal
tax rate is 30%, what is ABC’s after-tax cost of debt,
rd?
Also, ABC can issue perpetual preferred stock at a price
of $50 a share with an annual dividend of $3.00 a share. What is
the company’s cost of preferred stock, rps?
Besides, ABC has...
3. A company’s bonds currently sell for $1,200. The bonds have a 6-year maturity, a 6%...
3. A company’s bonds currently sell for $1,200.
The bonds have a 6-year maturity, a 6% coupon paid semi-annually,
and a par value of $1,000. What is the nominal yield to call (YTC)
on these bonds (to one decimal place, e.g., 5.1%)?
Calculate the cost of debt for a firm that has $10 million inbonds outstanding that...
Calculate the cost of debt for a firm that has $10 million in
bonds outstanding that mature in 15 years and have 5% coupon rates.
Coupons are paid semiannually. The face value of the bonds is $1000
and the price per bond is $900.
Edwards Construction currently has debt outstanding with a market value of $103,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $103,000 and a cost of 12 percent. The company has
EBIT of $12,360 that is expected to continue in perpetuity. Assume
there are no taxes.
a-1. What is the value of the company's equity? (Do not round
intermediate calculations. Leave no cell blank - be certain to
enter "0" wherever required.)
a-2. What is the debt-to-value ratio? (Do not round intermediate
calculations and round your answer to the nearest...
Edwards Construction currently has debt outstanding with a market value of $82,500 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $82,500 and a cost of 7 percent. The company has
EBIT of $5,775 that is expected to continue in perpetuity. Assume
there are no taxes.
a-1. What is the value of the company's equity? (Do not round
intermediate calculations. Leave no cell blank - be certain to
enter "0" wherever required.) Calculate Value of equity
a-2. What is the debt-to-value ratio? (Do not round intermediate
calculations and round your...
Edwards Construction currently has debt outstanding with a market value of $360,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $360,000 and a cost of 7 percent. The company has
an EBIT of $25,200 that is expected to continue in perpetuity.
Assume there are no taxes.
a. What is the value of the company’s equity and
the debt-to-value ratio? (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
Equity value
?...
Edwards Construction currently has debt outstanding with a market value of $82,500 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $82,500 and a cost of 7 percent. The company has
EBIT of $5,775 that is expected to continue in perpetuity. Assume
there are no taxes.
a-1. What is the value of the company's equity? (Do not round
intermediate calculations. Leave no cell blank - be certain to
enter "0" wherever required.) Value of equity
a-2. What is the debt-to-value ratio? (Do not round intermediate
calculations and round your answer...
Edwards Construction currently has debt outstanding with a market value of $390,000 and a cost of...
Edwards Construction currently has debt outstanding with a
market value of $390,000 and a cost of 7 percent. The company has
an EBIT of $27,300 that is expected to continue in perpetuity.
Assume there are no taxes.
a. What is the value of the company’s equity and
the debt-to-value ratio? (Do not round intermediate
calculations. Leave no cells blank - be certain to enter "0"
wherever required. Round your debt-to-value answer to 3 decimal
places, e.g., 32.161.)
Equity
value
$...
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