) Your firm wishes to issue a 20-year bond, an annual coupon of 6%, and the price has been determined to be RM880. The floatation cost of the issuance is 2% of the selling price. The tax rate is 24%. a) The net selling price is RM________. b) Annual YTM is ________% c) After tax cost of debt is ______% Answer by using formula not a Excel don't use chatgpt

) Your firm wishes to issue a 20-year bond, an annual coupon of 6%, and the price has been determined to be RM880. The floatation cost of the issuance is 2% of the selling price. The tax rate is 24%. a) The net selling price is RM__. b) Annual YTM is % c) After tax cost of debt is % Answer by using formula not a Excel don't use chatgpt

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 14P

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Similar questions

a. Using the cost-of-debt approximation formula, determine the pre-tax cost for a bond that sells at $ 925 par value and that pays a coupon of $ 85 for 20 years. The flotation costs are $ 5 per bond. You will have to show the counts. b. For the above case, calculate the cost of debt after taxes if the company's tax liability is 40%. You will have to show the counts.
The company wants to sell a Php 69,000,000 worth of bonds with a maturity of 25 years. The coupon rate for the bond is 9.5% and it will be paid annually. The company plans to sell the bond for Php975 per Php1,050 bond. Other cost directly attributable to selling the bond is Php20. What is the cost of debt before tax using the approximating cost formula?
B) Suppose an IAB with a face value of RM3,000,000.00 is sold at a discount rate of 5 percent and has 42 days remaining to maturity. What is the price for this IAB? Suppose that the interest rate on a taxable corporate bond is 9% and that the marginal tax is 28%. Suppose a tax-free municipal bond with a rate of 6.75% was available. Which security would you choose? D) Suppose you can invest in a money market security that matures in 75 days and offers a 3% nominal annual interest rate (i.e., bond equivalent yield). What is the effective annual interest return on this security? E) If the Malaysian price level rises by 6% relative to the price level in the United States, what does the theory of Purchasing Power Parity predict will happen to the value of the Malaysian ringgit in term of Dollars?
Considering a corporate tax rate of 20%, compute the present value of interest tax shields generated by the following types of debt: €100,000 10-year loan with maturity in 10 years and interest rate of 6%. Debt is to be paid 20% in 2 years, 30% in 7 years and the remaining at maturity. Perpetual bond (zero-coupon) with an implied yield of 5%. 5-year loan with maturity in 5 years, interest rate of 5% and constant annual payments.
The company wants to sell a Php 69,000,000 worth of bonds with a maturity of 25 years. The coupon rate for the bond is 9.5% and it will be paid annually. The company plans to sell the bond for Php975 per Php1,050 bond. Other cost directly attributable to selling the bond is Php20. What is the cost of debt before tax using the approximating cost formula? (Do not round off between computations. Round off the final answer to two decimal places. Example of writing your answer 2.58%)
DIRECTIONS: Read and analyze the following problems and supply what is required and support it with necessary computations. 1. A company plans to issue a 25-year bond with a 12.5% interest rate, issued at a face value of P1, 000. The company is subject a 30% tax rate and expects a return on investment at 8%. Compute for the cost of debt issuance.
Suppose that LilyMac Photography expects EBIT to be approximately $46,000 per year for the foreseeable future, and that it has 500 10-year, 5 percent annual coupon bonds outstanding. (Use Table 11.1.)What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac’s WACC?
SMC will be issuing bonds with a face value of P100,000 through an underwriter. The underwriter will be issuing the bonds at 106 but will charge 7% on face amount. The bonds will be irredeemable and will pay 8% annually. If the tax rate is 25%, what is the effective cost of the bonds?
ACT Inc. has a $1,000 (face value), 30 year bond issue selling for $719.90 that pays an annual coupon of 10.0 percent. Their marginal tax rate is 40%. 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?
Ratu Ltd is planning to issue bonds with 4 years to maturity and a face value of $100. The coupon rate of the bonds is 6.5% and coupons are paid annually. Ratu expects the net proceeds from each bond issued to be $95. Given the tax rate is 30%, determine the before- and after-tax cost of debt using either the trial and error method or by calculating the IRR.
Jimstan & Jimstan Corp. can sell a new 10-year bond with an annual coupon of 5% and a face value of $1,000 for $1,070. The company will incur flotation costs of $40 per bond and has a tax rate of 25%. What is the company's after-tax cost of debt? (use linear allocation method.)
Calhoun Company's pre-tax cost of debt if the firm has outstanding bonds with par value of $1,000, a coupon rate of 8%, semi-annual coupon payments, 20 years remaining until maturity, and a market price of $1,058? Enter your answer as an annualized rate in decimal format, and show four decimal places. For example, if your answer is 5.1%, enter .0510.