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dedylja [7]
3 years ago
5

The Heuser Company’s currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could issue n

ew bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is Heuser’s after-tax cost of debt?
Business
1 answer:
liraira [26]3 years ago
7 0

Answer: After-tax cost of debt is 7.8%.

Explanation:

Given that,

coupon = 10% (outstanding bonds)

yield to maturity (YTM) = 12%

marginal tax rate = 35%

The after-tax cost of debt:

After-tax cost of debt = YTM (1 - Tax rate)

= 12% (1 - 0.35)

= 0.12 (0.65)

= 0.078

= 7.8%

YTM is used in the after-tax calculation because it represents the true pre-tax cost of debt to the issuer.

Therefore, the after-tax cost of debt is 7.8%

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Answer:

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Performance clause in a valid contract refers to doing or acting in a way as is required by the terms of the contract.

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The best definitions of input, output and processing are as follows:

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  • Processing is the intervening activity that changes the input to output.

  • Output is the product of processing input or resources.  Output is typically the finished outcome from a processing activity.

<h3>What is the relationship between input, output, and processing?</h3>

Processing is at the center of input and output.  

Processing involves changing, manipulating, or transforming input resources into output or finished products.

Thus, the definitions of input, output and processing are as given above.

Learn more about input, output, and processing at brainly.com/question/25250720

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