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Cerrena [4.2K]
3 years ago
10

A firm recently issued $1,000 par value, 20-year bonds with a coupon rate of 9%. Coupon interest payments will be paid semi-annu

ally. The bonds sold at par value, but the firm paid flotation costs amounting to 5% of par value. The firm has a tax rate of 21%. What is the firm's after-tax cost of debt for these bonds?
Business
1 answer:
Valentin [98]3 years ago
3 0

Answer:

cost of debt 0.0748421 = 7.48%

Explanation:

\frac{r(1-t)}{(1-f)} = $after tax cost of debt

The flotation cost makes the cost increase as we did not receive the whole amount but a diminished portion.

Also, the cost is decrease as are tax deductible making the interest expense to provide a tax shield.

pretax cost of debt =

0.09 x (1 -0.21) / (1 - 0.05) = 0,0748421

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The internet makes it more difficult to participate in international trade.<br> A True<br> B False
lisov135 [29]

Answer:

Explanation:

All these have resulted in a marketing strategy development in the business model and environment. Thus, the internet facilitates international trade by allowing firms to advertise their products, accept orders, deal in or transact goods and services quickly and effectively to intended consumers.

ture

5 0
3 years ago
Boney Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar b
padilas [110]

Answer

Financial advantage from further processing    $31

Explanation:

<em>A company should process further a product if the additional revenue from the split-off point is greater than than the further processing cost.  </em>

<em>Also note that all cost incurred up to the split-off point (the cost of crushing) are irrelevant to the decision to process further .  </em>

<em>                                                                                                     $</em>

Sales revenue after the split off point( 64+64)                       128

Sales revenue at the split-off point (16+47)                            <u> 63</u>

Additional sales revenue                                                          65

Further processing cost ( 15+19)                                              <u>(34 )</u>

<em>Net income after further processing                                        31</em>

Financial advantage from further processing    $31

4 0
4 years ago
Read 2 more answers
Revenue or income, minus departmental expenses and undistributed expenses equals:
mixer [17]
Departmental income can be considered the contribution of revenues to profits because it is computed after deducting the direct costs of providing the service or product. Subtracting all of the undistributed operating expenses from total revenues results in gross operating profit per available room (GOPPAR).
8 0
4 years ago
Explain the make-or-buy process and describe how to perform the financial calculations involved in the simple lease-or-buy examp
ioda

Answer:

A make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier.

The three main types of contracts if you want to outsource are

  1. Time and materials Contract
  2. Fixed Price Contract
  3. Target Cost Contract

Explanation:

Make-or-buy decisions, like outsourcing decisions, speak to a comparison of the costs and advantages of producing in-house versus buying it elsewhere.

There are many factors at play that may tilt a company from making an item in-house or outsourcing it.

Make-or-buy decisions must be based on the relevant cost of each option.

Relevant costs in make-or-buy decisions include all incremental cash flows.

Any cost that does not change as a result of the decision should be ignored such as depreciation and indirect fixed costs.

3 0
3 years ago
David, an Alabama resident, files a suit in an Alabama court against QuickAds, an Internet company based in Georgia that provide
mihalych1998 [28]

Answer:

B. Not likely to have jurisdiction over the case is the correct answer.

Explanation:

In the US, A state court can have jurisdiction over the case in which there is some connection to the state. The majority of civil and criminal cases are handled by the state courts. State courts apply state laws to decide cases. They are common law cases. The state's constitution and legislation's are binding on them, if the need arises they also take the federal court into account. The decisions of the lower courts can be challenged in high courts.

7 0
3 years ago
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