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Savatey [412]
3 years ago
14

J&R Renovation, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturi

ty that is quoted at 106 percent of face value. The issue makes semiannual payments and has a coupon rate of 6 percent annually.What is the company’s pretax cost of debt?
If the tax rate is 35 percent, what is the aftertax cost of debt?
Business
1 answer:
g100num [7]3 years ago
6 0

Answer:

After tax cost of debt = 5.44*(1-0.35)% = 3.54%

Explanation:

PV = 106

PMT = 6/2 =-3

N = 16*2 = 32 semi annual

FV = -100

Semi annual yield = 2.72%

Annual cost of debt = 2.72%*2 = 5.44%

After tax cost of debt = 5.44*(1-0.35)% = 3.54%

Using Rate function in Excel or Financial calculator

You might be interested in
Milo Clothing experienced the following events during 2016, its first year of operation: 1. Acquired $12,000 cash from the issue
Serga [27]

Answer:

Explanation:

The four transactions  will be recorded in the general journal as follows:

1) Debit cash                 $12,000

             Credit common stock                       $12,000

(To record the sale of common stock)

2) Debit purchases                 $5,600

            Credit   cash                 $5,600

(To record purchase of inventory in cash)

3) Debit cash                 $5,712

           Credit sales                        $3,360

            Credit gross profit              $2,352

(To record the sale of inventory in cash)

4) Debit advertising expenses                   $650

          Credit cash                     $650

(To record the payment of advertising expenses in cash)

5 0
3 years ago
Your parents are giving you $205 a month for 4 years while you are in college. At an interest rate of .48 percent per month, wha
luda_lava [24]

Answer:

$8,770.00

Explanation:

In this question we use the present value formula i.e shown in the attachment below:

Data provided in the question

Future value = $0

Rate of interest = 0.48%

NPER = 4 years × 12 months = 48 months

PMT = $205

The formula is shown below:

= -PV(Rate;NPER;PMT;FV;type)

So, after solving this, the answer would be $8,770.00

7 0
3 years ago
Methods analysis is particularly valuable when it is used on jobs that: (I) are high in labor content. (II) are done frequently.
ycow [4]

Answer:

B. I, II, and IV only

Explanation:

Job specialization can be defined as a strategic process which typically involves the ability of employees working in an organization to develop specific skills, knowledge, great expertise or professionalism and experience to perform their duties, tasks or job functions effectively and efficiently.

In order to gain the requisite skills, expertise and knowledge for job specialization, it is very important for the employees to have undergone an extensive training and a good number of years in work experience.

The primary purpose of job specialization is to increase efficiency and productivity because the employees are able to specialize in the use of specific tools (equipments) to accomplish their tasks, as well as limit the level of error or mistakes in the production process.

In Business management, method analysis can be defined as the study of the detailed process for the performance of a job i.e how a job is done. Thus, method analysis gives a detailed report on the tasks involved in the performance of a job and how they are to be done.

Basically, methods analysis is particularly valuable when it is used on jobs that:

1. Are high in labor content.

2. Are done frequently.

3. Are unsafe, tiring, unpleasant, and/or noisy.

3 0
2 years ago
Which statement best describes payday leaders and pawnbrokers?
miv72 [106K]
C: They charge extremely high interest rates.
6 0
2 years ago
Read 2 more answers
Some large hardware stores, such as Home Depot, boast of carrying as many as 20,000 different products in each store. This volum
jeyben [28]

Answer:

C. The choice of consumers regarding what to purchase to satisfy their wants and the choice of producers regarding what to produce to maximize profits.

Explanation:

The extremely large amount of products that large hardware stores, such as Office Depot, carry, are most likely a consequence of the combination of these factors. On the one hand, the customers who go to this stores have a particular want, and their purchases are intended to satisfy these wants. On the other hand, the producers also have to make a choice, and they generally chose the products that are most likely to maximize their profits.

5 0
2 years ago
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