Question
In: Finance
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of...
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 8.6% with semiannual payments, and will use an investment bank that charges $30 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices?
a. $920.06
b. $1,008.58
c. $1,092.49
d. $1,170.24
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of...
Cost of debt with fees. Kenny
Enterprises will issue a bond with a par value of $1,000, a
maturity of twenty years, and a coupon rate of 11.6% with
semiannual payments, and will use an investment bank that charges
$30 per bond for its services. What is the cost of debt
for Kenny Enterprises at the following market prices? (ROUND TO
TWO DECIMAL PLACES.)
a. $954.14 = ____%?
b. $1,017.02 = ____%?
c. 1,057.63 = ____%?
d. $1,136.54 = ____%?
Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of...
Cost of debt with fees. Kenny Enterprises will issue a bond with
a par value of $1000, a maturity of twenty years, and a coupon
rate of 8.0% with semiannual payments, and will use an investment
bank that charges $25 per bond for its services. What is the cost
of debt for Kenny Enterprises at the following market prices?
A. $920
B. $1,000
C. $1,080
D. $1,173
Cost of debt. Kenny Enterprises has just issued a bond with a par value of $1,000,...
Cost of debt. Kenny Enterprises has just issued a bond with a
par value of $1,000, a maturity of twenty years, and a coupon
rate of 8.9% with semiannual payments. What is the cost of debt
for Kenny Enterprises if the bond sells at the following prices?
What do you notice about the price and the cost of debt?
a. $956.14
b. $1,000.00
c. $1,035.22
d. $1,137.07
Kenny Enterprises has just issued a bond with a par value of $1,000, a maturity of...
Kenny Enterprises has just issued a bond with a par value of
$1,000, a maturity of twenty years, and a coupon rate of 12.3% with
semiannual payments. What is the cost of debt for Kenny Enterprises
if the bond sells at the following prices? What do you notice about
the price and the cost of debt?
a.$951.17
b.$1000.00
c.$1067.87
d.$1156.76
(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?
(Cost of debt) Carraway Seed Company is issuing a $1,000 par value bond that pays 11...
(Cost of debt) Carraway Seed Company is issuing a $1,000 par
value bond that pays 11 percent annual interest and matures in 11
years. Investors are willing to pay $965 for the bond. Flotation
costs will be 13 percent of market value. The company is in a 30
percent tax bracket. What will be the firm's after-tax cost of
debt on thebond?
The firm's after-tax cost of debt on the bond will be ??
Crown Enterprises recently issued a bond that has a $1,000 face or par value. This bond...
Crown Enterprises recently issued a bond that has a
$1,000 face or par value. This bond has a coupon
interest rate of 6% and has a life of
8 years. If interest is paid annually on this
bond, calculate the market value today at t = 0 of this bond,
assuming a required return for this bond of
5%.
Now, assume that the
required return on this bond increases to 8%.
Assume also that the bond pays interest semi-annually,
rather...
Suppose a company will issue new 20-year debt with a par value of $1,000 and a...
Suppose a company will issue new 20-year debt with a par value
of $1,000 and a coupon rate of 8%, paid annually. The issue price
will be $1,000. The tax rate is 35%. If the flotation cost is 2% of
the issue proceeds, then what is the after-tax cost of debt?
Disregard the tax shield from the amortization of flotation costs.
Round your answer to two decimal places. % What if the flotation
costs were 11% of the bond issue?...
The approximate after-tax cost of debt for a 20-year, 7 percent, $1,000 par value bond selling...
The approximate after-tax cost of debt for a 20-year, 7 percent,
$1,000 par value bond selling at $960 (assume a marginal tax rate
of 40 percent) is
Select one:
a. 4.41 percent.
b. 5.15 percent.
c. 7 percent.
d. 7.35 percent.
Cost of debt using the approximation formula For the following $1,000-par-value bond, assuming annual interest payment...
Cost of debt using the approximation formula For the following
$1,000-par-value bond, assuming annual interest payment and a
22%
tax rate, calculate the after-tax cost to maturity using the
approximation formula.
Life underwriter fee discount interest
20 years $35 -$30 6%
The after-tax cost of financing using the approximation formula
is
_______%.
(Round to two decimal places.)
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