JP Smith, Inc has an outstanding bond issue, which has eight years remaining to maturity and a coupon rate of 4.250%. Interest payments are made semi-annually, the firm's tax rate is .35, and the bonds are currently trading at $1,018.00. a. What is the yield to maturity on the bonds? b. Ignoring flotation costs, what is the firm's cost of debt (before tax)? c. What is its after-tax cost of debt?
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- ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6.6 percent annually. What is the company's pretax cost of debt? If the tax rate is 24 percent, what is the aftertax cost of debt? Pretax cost of debt: __________% Aftertax cost of debt: __________%3. Calculating Cost of Debt Shanken Corp. issued a 30-year, 5.9 percent semiannual bond three years ago. The bond currently sells for 106 percent of its face value. The company's tax rate is 22 percent. a. What is the pretax cost of debt? b. What is the aftertax cost of debt? c. Which is more relevant, the pretax or the aftertax cost of debt? Why?A company has outstanding long-term bonds with a face value of$1,000, a 10% coupon rate, 25 years remaining until maturity, anda current market value of $1,214.82. If it pays interest semiannually,then what is the nominal annual pre-tax required rate of return ondebt? (8%) If the company’s tax rate is 40%, what is the after-taxcost of debt? (4.8%)
- 3. Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond currently sells for 93 percent of its face value. The Company's tax rate is 35%. a. What is the pre-taxed cost of debt? b. What is the after tax cost of debt? c. Which is more relevant, the pre-tax or the after- tax cost of debt? Why? In question 3 above, suppose the book value of the debt issues is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years to mature. The book value of this issue is $35 million and the bond sell for 57 percent of par. a. What is the company's total book value of debt? b. The total market value? c. What is your best estimate of the after-tax cost of debt now?|Jones Cricket Institute issued a 30 year, 8 percent semi-annual bond 3 year ago. The bond currently sells for 93 percent of its face value. The Company's tax rate is 35%. a. What is the pre-taxed cost of debt? b. What is the after tax cost of debt? c. Which is more relevant, the pre-tax or the after- tax cost of debt? Why?1. ACT Inc. has a $1,000 (face value), 20 year bond issue selling for $1,229.40 that pays an annual coupon of 8.0 percent. Their marginal tax rate is 25%. a. What would be BAT's current before-tax component cost of debt? a. What would be BAT's current after-tax component cost of debt?
- Jones Cricket Institute issued a 30 year, 8 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. The Company’s tax rate is 35%.a. What is the pre-taxed cost of debt?b. What is the after-tax cost of debt?c. Which is more relevant, the pre-tax or the after-tax cost of debt? Why? In the question above, suppose the book value of the debt issues is $60 million. In addition, the company has a second debt issue on the market, a zero-coupon bond with 10 years to mature. The book value of this issue is $35 million and the bond sells for 57 percent of par. a. What is the company’s total book value of debt?b. The total market value?c. What is your best estimate of the after-tax cost of debt now?Sunrise, Incorporated, is trying to determine its cost of debt. The firm has a debt issue outstanding with 22 years to maturity that is quoted at 94 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. 1. 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.) . If the tax rate is 21 percent, what is the 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.) Pretax cost of debt % Aftertax cost of debtThe following is the information on debt issued by Huntington Power Co. Calculate the after-tax cost of debt for the firm. Debt: 4 percent coupon paid semiannually, $1,000 par value, 15 years to maturity, current market price of the bond is $889.0. Tax rate is 20%.