Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 11, Problem 9P
Bond Yield and After-Tax Cost of Debt
A company’s 6% coupon rate, semiannual payment, $1,000 par
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Bond Yield and After-Tax Cost of Debt
A company's 7% coupon rate, semiannual payment, $1,000 par value bond that matures in 25 years sells at a price of $516.97. The company's federal-plus-state tax rate is 25%. What is the firm's after-tax component cost of debt for
purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to one decimal place.
%
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 10.8% 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. $931.44
b. $1,013.16
c. $1,102.27
d. $1,152.27
.....
a. What is the cost of debt for Kenny Enterprises at a market price of $931.44?
|% (Round to two decimal places.)
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 8.8% 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. $940.59
b. $1,004.38
c. $1,103.95
d. $1,162.45
Chapter 11 Solutions
Intermediate Financial Management (MindTap Course List)
Ch. 11 - Define each of the following terms:
Weighted...Ch. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Distinguish between beta (i.e., market) risk,...Ch. 11 - Suppose a firm estimates its overall cost of...Ch. 11 - 11-1 After-Tax Cost of Debt
Calculate the...Ch. 11 - Prob. 2PCh. 11 - Cost of Preferred Stock
Duggins Veterinary...Ch. 11 - Prob. 4PCh. 11 - Prob. 5P
Ch. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Bond Yield and After-Tax Cost of Debt A companys...Ch. 11 - Prob. 10PCh. 11 - Prob. 11PCh. 11 - Calculation of gL and EPS Spencer Suppliess stock...Ch. 11 - The Cost of Equity and Flotation Costs
Messman...Ch. 11 - Prob. 14PCh. 11 - WACC Estimation
On January 1, the total market...Ch. 11 - Prob. 16PCh. 11 - During the last few years, Jana Industries has...Ch. 11 - What is the market interest rate on Jana’s debt,...Ch. 11 - Prob. 3MCCh. 11 - Prob. 4MCCh. 11 - Prob. 5MCCh. 11 - Prob. 6MCCh. 11 - Prob. 7MCCh. 11 - Prob. 8MCCh. 11 - Prob. 9MCCh. 11 - Prob. 10MCCh. 11 - What procedures can be used to estimate the...Ch. 11 - Prob. 12MCCh. 11 - Prob. 13MCCh. 11 - Prob. 14MCCh. 11 - What four common mistakes in estimating the WACC...
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