Question
In: Finance
Several years ago, a bond is sold at its par value ($i,000). The time to maturity...
Several years ago, a bond is sold at its par value ($i,000). The time to maturity is 20 years. The coupon rate is 7.00%. The coupon payments are made semiannually. The current price of the bond is $1,150, and the company's tax rate is 40%. What is the component cost of debt for use in the WACC calculation? a) 4.16% b) 2.58% c) 2.89% d) 3.44%
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Several years ago, the ABC Company sold a $1,000 par value bond that now has 20...
Several years ago, the ABC Company sold a $1,000 par value bond
that now has 20 years to maturity and a 8.00% annual coupon that is
paid semiannually. The bond currently sells for $925 and the
company’s tax rate is 30%. What is the after-tax cost of debt?
Group of answer choices
Several years ago the Jakob Company sold a $1,000 par value, noncallable bond that now has...
Several years ago the Jakob Company sold a $1,000 par value,
noncallable bond that now has 12 years to maturity and a 6.50%
annual coupon that is paid semiannually. The bond currently sells
for $1,050, and the company’s tax rate is 22%. What is the
component cost of debt for use in the WACC calculation?
Use Nominal rates. Do not round your intermediate calculations.
State in percentage terms without the percent sign symbol and round
to the second decimal place....
6. The Lincoln Company sold a $1,000 par value, noncallable bond several years ago that now...
6. The Lincoln Company sold a $1,000 par value, noncallable bond
several years ago that now has 20 years to maturity and a 7.00%
annual coupon that is paid semiannually. The bond currently sells
for $955 and the company's tax rate is 25%. What is the component
cost of debt for use in the WACC calculation?
a.
5.35%
b.
6.28%
c.
6.04%
d.
5.58%
e.
5.81%
the Stanley company sold a $1000 par value, noncallable bond several years ago that now has...
the Stanley company sold a $1000 par value, noncallable bond
several years ago that now has 10 years to maturity and a 8.00%
annual coupon that is paid semiannually. the bond currently sells
for $922 and the tax rate is 30%. What is the component cost of
debt for use in the WACC calculation? a. 6.28% b. 5.46% c. 5.65% d.
6.45% e. 7.03%
Farmington Enterprises stock trades for $42.50 per share. It is
expected to pay a $2.50 dividend...
A bond has a par value of $1,000, a time to maturity of 10 years, and...
A bond has a par value of $1,000, a time to maturity of 10
years, and a coupon rate of 8.20% with interest paid annually. If
the current market price is $820, what will be the approximate
capital gain of this bond over the next year if its yield to
maturity remains unchanged? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Capital Gain=?
A bond has a par value of $1,000, a time to maturity of 20 years, and...
A bond has a par value of $1,000, a time to maturity of 20
years, and a coupon rate of 7.10% with interest paid annually. If
the current market price is $710, what will be the approximate
capital gain of this bond over the next year if its yield to
maturity remains unchanged? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Capital gain ___$
A bond has a par value of $1,000, a time to maturity of 10 years, and...
A bond has a par value of $1,000, a time to maturity of 10
years, and a coupon rate of 8% with interest paid annually. If the
current market price is $750, what is the capital gain yield of
this bond over the next year?
A bond has a par value of $1,000, a time to maturity of 20 years, and...
A bond has a par value of $1,000, a time to maturity of 20
years, and a coupon rate of 7.10% with interest paid annually. If
the current market price is $710, what will be the approximate
capital gain of this bond over the next year if its yield to
maturity remains unchanged? (Do not round intermediate
calculations. Round your answer to 2 decimal places.) Capital
gain
A bond has a par value of $1,000, a time to maturity of 10 years, and...
A bond has a par value of $1,000, a time to maturity of 10
years, and a coupon rate of 8.70% with interest paid annually. If
the current market price is $870, what will be the approximate
capital gain of this bond over the next year if its yield to
maturity remains unchanged? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Capital gain
$
A 10 percent coupon bond was issued 2 years ago and sold at par value. Now,...
A 10 percent coupon bond was issued 2 years ago and sold at par
value. Now, the required return on the same bond is 8 percent. What
is the coupon rate today?
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