1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Lana71 [14]
3 years ago
6

A bond has a face value of $1,000. It has a maturity of 20 years and a coupon rate of 9%. The bond pays interest semiannually. T

he yield on the bond is 10%. Assuming a 30% tax rate, what is the after tax cost of this bond, for purposes of calculating the company's WACC?
Business
1 answer:
PolarNik [594]3 years ago
6 0

Answer:

After tax cost of bond= 7%

Explanation:

In order to find the after tax cost of bond we need to know its pre tax cost of debt. The yield on a bond is its pre tax cost. In this question we are already given the yield which is 10%. This means that the pre tax cost of debt is 10%. Now in order to find the after tax cost of debt we will multiply the pre tax cost of debt by (1-tax Rate)

After tax cost of bond= 0.1*(1-0.3)= 0.07= 7%

You might be interested in
The price of a video is ​$4 and the price of a dinner is ​$16. from this we know that a consumer who is maximizing utility will
kenny6666 [7]

b. buy enough of the two goods such that the marginal utility from the last dinner consumed is four times greater than the marginal utility from the last video.

This is because they are paying 4 times as much for the dinner so should get 4 times the utility from it.

3 0
3 years ago
Kristy's health insurance policy benefits max out at $25,000 per year. What is
Zanzabum

Another name for the maximum payout on the health insurance policy is known as Limit of liability.

A Limit of liability means the maximum amount of liability that an insurance policy has stated at the onset, to pay at most when a loss occurred to the policyholder.

Hence, another name for the maximum payout on the health insurance policy is known as Limit of liability.

Therefore, the Option B is correct.

Read more about liability Limit

<em>brainly.com/question/25439662</em>

7 0
2 years ago
Wesimann Co. issued 15-year bonds a year ago at a coupon rate of 7.5 percent. The bonds make semiannual payments and have a par
brilliants [131]

Answer:

$1,161.46

Explanation:

In order to determine the current bond price we can use an excel spreadsheet and the present value formula: =PV(Rate,Nper,PMT,FV)

where:

  • Nper = 14 x 2 = 28 (15 year bond issued 1 year ago = 14 years)
  • Rate = 5.8% / 2 = 2.9% (semiannual payments)
  • PMT = ($1,000 x 7.5%) / 2 = $37.50
  •  FV = $1,000 (face value of bonds)
  • PV = ?  

Current price =PV(Rate,Nper,PMT,FV) =PV(2.9%,28,37.50,1000) = $1,161.46

7 0
3 years ago
The Income Statement for Pumpkin Co. is shown below:
Alik [6]

100000875466555547899977

5 0
2 years ago
After retiring from Jones Corp., a partnership founded by Megan Jones and other partners, Megan grew tired of staying at home an
lana [24]

Answer:

The Correct option is <u>"B"</u>

Explanation:

Any person who by arguments verbal or written or by behavior characterize himself, or wittingly documents himself to be drawn, to be a companion in a very secure, is responsible as a companion in this organization to any person who has on the religion of one such illustration specified credit to the organization, whether or not the individual signifying himself or drawn to be a companion will or doesn't understand that the illustration has extended the individual therefore providing credit.

8 0
3 years ago
Read 2 more answers
Other questions:
  • ConsecoConseco Oil Company has an account titled Oil and Gas Properties. ConsecoConseco paid $ 6 comma 600 comma 000$6,600,000 f
    12·1 answer
  • Why is the amount of underapplied (overapplied) manufacturing overhead different from requirement 2 above? (you may select more
    15·1 answer
  • Company A has a beta of 0.90, while Company B's beta is 1.20. The required return on the stock market is 11.00%, and the risk-fr
    10·1 answer
  • g The Deluxe Division, a profit center of Riley Manufacturing Company, reported the following data for the first quarter of 2019
    14·1 answer
  • According the kinked demand curve model:
    9·1 answer
  • Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,
    7·1 answer
  • Under the accrual basis of accounting, many of the account balance in the ledger at the end of the accounting period are reporte
    5·1 answer
  • If different types of parol evidence contradict each other, this is the hierarchy of what prevails:
    9·1 answer
  • Provide examples of each: consumer durable goods, consumer nondurable goods, and services.
    10·1 answer
  • Set up abs solve an equation for the following business situation
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!