Question
In: Finance
Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 4 years ago. The bond...
|
Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 4 years ago. The bond currently sells for 104 percent of its face value. The company’s tax rate is 23 percent. |
| a. |
What is the company’s pretax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| b. | What is the company’s aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual coupon bond 4 years ago. The bond...
Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual
coupon bond 4 years ago. The bond currently sells for 104 percent
of its face value. The company’s tax rate is 23 percent. The book
value of the debt issue is $55 million. In addition, the company
has a second debt issue, a zero coupon bond with 10 years left to
maturity; the book value of this issue is $30 million, and the
bonds sell for 58 percent of par. a....
Jiminy’s Cricket Farm issued a 20-year, 5 percent semiannual coupon bond 2 years ago. The bond...
Jiminy’s Cricket Farm issued a 20-year, 5 percent semiannual
coupon bond 2 years ago. The bond currently sells for 96 percent of
its face value. The company’s tax rate is 21 percent. The book
value of the debt issue is $55 million. In addition, the company
has a second debt issue, a zero coupon bond with 8 years left to
maturity; the book value of this issue is $30 million, and the
bonds sell for 67 percent of par.
What...
Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual bond four years ago. The bond currently...
Jiminy’s Cricket Farm issued a 20-year, 7 percent semiannual
bond four years ago. The bond currently sells for 98 percent of its
face value. The company’s tax rate is 25 percent. What is the
aftertax cost of debt?
Select one:
A. 7.68%
B. 3.61%
C. 7.21%
D. 5.41%
E. 5.89%
Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual coupon bond 4 years ago. The bond...
Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual
coupon bond 4 years ago. The bond currently sells for 105 percent
of its face value. The company’s tax rate is 23 percent. The book
value of the debt issue is $60 million. In addition, the company
has a second debt issue, a zero coupon bond with 8 years left to
maturity; the book value of this issue is $35 million, and the
bonds sell for 67 percent of par.
A....
Jiminy’s Cricket Farm issued a 15-year, 6 percent semiannual coupon bond 4 years ago. The bond...
Jiminy’s Cricket Farm
issued a 15-year, 6 percent semiannual coupon bond 4 years ago. The
bond currently sells for 93 percent of its face value. The
company’s tax rate is 23 percent.
a.
What is the company’s
pretax cost of debt? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b.
What
is the company’s aftertax cost of debt? (Do not round
intermediate calculations and enter your answer as a...
Jiminy’s Cricket Farm issued a 30-year, 5 percent semiannual coupon bond 6 years ago. The bond...
Jiminy’s Cricket Farm issued a 30-year, 5 percent semiannual
coupon bond 6 years ago. The bond currently sells for 106 percent
of its face value. The company’s tax rate is 25 percent. The book
value of the debt issue is $55 million. In addition, the company
has a second debt issue, a zero coupon bond with 10 years left to
maturity; the book value of this issue is $45 million, and the
bonds sell for 73 percent of par. a....
Jiminy’s Cricket Farm issued a 16-year, 6 percent semiannual coupon bond 2 years ago. The bond...
Jiminy’s Cricket Farm issued a 16-year, 6 percent semiannual
coupon bond 2 years ago. The bond currently sells for 91 percent of
its face value. The company’s tax rate is 38 percent. The book
value of the debt issue is $40 million. In addition, the company
has a second debt issue, a zero coupon bond with 11 years left to
maturity; the book value of this issue is $30 million, and the
bonds sell for 50 percent of par.
a....
Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate...
Jiminy’s Cricket Farm issued a bond with 20 years to maturity
and a semiannual coupon rate of 5 percent 2 years ago. The bond
currently sells for 96 percent of its face value. The company’s tax
rate is 21 percent. The book value of the debt issue is $55
million. In addition, the company has a second debt issue on the
market, a zero coupon bond with 8 years left to maturity; the book
value of this issue is $30...
Jiminy’s Cricket Farm issued a bond with 15 years to maturity and a semiannual coupon rate...
Jiminy’s Cricket Farm issued a bond with 15 years to maturity
and a semiannual coupon rate of 8 percent 3 years ago. The bond
currently sells for 96 percent of its face value. The company’s tax
rate is 35 percent. The book value of the debt issue is $60
million. In addition, the company has a second debt issue on the
market, a zero coupon bond with 10 years left to maturity; the book
value of this issue is $35...
Jiminy’s Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate...
Jiminy’s Cricket Farm issued a bond with 30 years to maturity
and a semiannual coupon rate of 10 percent 4 years ago. The bond
currently sells for 94 percent of its face value. The company’s tax
rate is 38 percent. The book value of the debt issue is $50
million. In addition, the company has a second debt issue on the
market, a zero coupon bond with 14 years left to maturity; the book
value of this issue is $50...
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