Question
In: Finance
Calculate cost of debt for the following: The bond with a face value of 1000 were...
Calculate cost of debt for the following: The bond with a face value of 1000 were trading at RM 940 with 5 years to maturity ( annual coupon payment of 5%). Buying the truck means that he would incurring a cost of RM 85,000 each year for the whole feet. The company tax rate is 30%. The cost of capital is same as cost of deb. Which one is wiser equity or debt?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Compute the cost of the following: a. A bond that has $1000 par value (face value)...
Compute the cost of the following:
a. A bond that has $1000 par value (face value) and a contract
or coupon interest rate of 11 percent. A new issue would have a
floatation cost of 6 percent of the $1125 market value. The bonds
mature in 9 years. The firm's average tax rate is 30 percent and
its marginal tax rate is 32 percent.
b. A new common stock issue that paid a $1.50 dividend last
year. The par value...
Calculate the value of a bond with face value of 1000 usd paying interest of 8%...
Calculate the value of a bond with face value of 1000 usd paying
interest of 8% over 5 tears and a yield of 7%
What is the present value of the following bond offering. Face value of $1000, maturity in...
What is the present value of the following bond offering. Face
value of $1000, maturity in 10 years, the coupon rate is 8%, the
yield to maturity is also 8%, coupon is paid
semi-annually.
a.
$1,050
b.
$950
c.
825
d.
1,231
e.
1,000
Calculate the price if a 5% coupon, $1000 face value 5-year bond if the appropriate annual...
Calculate the price if a 5% coupon, $1000 face value 5-year
bond if the appropriate annual discount rates are 3% for the first
2 years and 8% for the final three years. Calculate this bond’s
yield to maturity or average annual yield. Calculate your return if
you hold this bond for one year. If we assume the change in annual
rates is due to expectations of inflation, what does the bond
market thing inflation is going to do in the...
how do u calculate value of a bond You consider purchasing $1000 face value 7 year...
how do u calculate value of a bond
You consider purchasing $1000 face value 7 year annual coupon bond
which currently sells for $975.20 at the bond market the annual
coupon payments are $70 given that your annual required rate of
return to purchase his bond is 8%
a)What is the value of the bond to you a potential investor?
b) What is your expected rate of return should you purchase the
barn today and hold it to maturity
c)...
You own a bond with the following features: Face value of $1000, Coupon rate...
You own a bond with the following features:
Face value of $1000,
Coupon rate of 5% (annual)
13 years to maturity.
The bond is callable after 7 years with the call price of
$1,071.
If the market interest rate is 3.51% in 7 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond?
State your answer to the nearest penny (e.g., 84.25)
If...
18- You own a bond with the following features: Face value of $1000, Coupon...
18-
You own a bond with the following features:
Face value of $1000,
Coupon rate of 3% (annual)
9 years to maturity.
The bond is callable after 4 years with the call price of
$1,069.
If the market interest rate is 4.68% in 4 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond?
State your answer to the nearest penny (e.g., 84.25)...
6- You own a bond with the following features: Face value of $1000, Coupon...
6- You own a bond with the following features:
Face value of $1000,
Coupon rate of 5% (annual)
8 years to maturity.
The bond is callable after 4 years with the call price of
$1,073.
If the market interest rate is 3.59% in 4 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond?
State your answer to the nearest penny (e.g., 84.25)...
You own a bond with the following features: Face value of $1000, Coupon rate...
You own a bond with the following features:
Face value of $1000,
Coupon rate of 4% (annual)
11 years to maturity.
The bond is callable after 7 years with the call price of
$1,069.
If the market interest rate is 4.23% in 7 years when the bond
can be called, if the firm calls the bond, how much will it save or
lose by calling the bond?
State your answer to the nearest penny (e.g., 84.25)
If...
(Cost of debt) Carraway Seed Company is issuing a $1000 par value bond that pays 11...
(Cost of debt) Carraway Seed Company is issuing a $1000 par
value bond that pays 11 percent annual interest and matures in 12
years. Investors are willing to pay $945 for the bond. Flotation
costs will be 11 percent of market value. The company is in a 20
percent tax bracket. What will be the firm's after-tax cost of
debt on the bond?
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