Gus was recently laid off, and he is struggling to pay his bills and make ends meet. Gus is meeting with a staffing agency later
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Answer:
The explanation of this question is given below in the explanation section.
Explanation:
In this question, it is asked about to select one project among two given project based on the evaluation criteria. These evaluation criteria include:
- Proven technology
- Ease of transition
- Projected cost saving
Based on my analysis, I will select the project cairso because It has high transition and high projected cost saving.
The analysis of these project is shown in attached picture with this solution.
Answer :
cost of debit is 4.64 %
Explanation:
given data
sold = $1,000
time t = 20 year
rate r = 7 %
bond currently sells = $925
tax rate = 40%
to find out
component cost
solution
we will find first YTM by given formula that is
bond currently sells = ( semi annual coupon /
) + sold / (1+YTM/2)^{2t}[/tex] )
put here all value
so we get
925 = ( (1000×7/100×7) /
) + sold / (1+YTM/2)^{40}[/tex] )
so here solve and we get
YTM = 3.87 %
and
cost of debit = 3.87 % × 2 = 7.74%
we know that cost of debit after tax is equal cost of debit ( 1 - tax rate )
put here value
cost of debit = cost of debit ( 1 - tax rate )
cost of debit = 7.74% ( 1 - 40% )
cost of debit is 4.64 %