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Alexeev081 [22]
3 years ago
14

At the present time, Perpetualcold Refrigeration Company (PRC) has 10-year noncallable bonds with a face value of $1,000 that ar

e outstanding. These bonds have a current market price of $1,278.41 per bond, carry a coupon rate of 11%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 45%. If PRC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? 3.10% 3.87% 3.48% 4.64%
Business
1 answer:
Assoli18 [71]3 years ago
6 0

Answer:

The correct answer is 4.33%(approx)

Explanation:

According to the scenario, the given data are as follows:\

Face value = $1,000

Market price = $1,278.41

Coupon Rate = 11%

So Coupon Payment = $110

Years to maturity = 10 years

So, we can calculate the after tax cost of debt by using following method:

After Tax Cost of Debt = YTM × ( 1 - Rate of Tax)

Where, YTM = \frac{C + \frac{F - P}{T} }{\frac{F + P}{2} }

So, by putting the following value, we get

YTM = 0.0721

So by putting the value in formula, we get

After Tax Cost of Debt = 0.0721 × ( 1 - 0.4)

= 4.33% (approx)

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Answer:

The correct answer is letter "C": there still would be an economic problem.

Explanation:

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In the case of the example, <em>after taking a pill that made people selfless, those individuals would still lack coordination because it would be difficult to determine which sector of individuals will be the priority for the satisfaction of needs. Therefore, even after the introduction of the pill,  that society would give an economic problem.</em>

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3 years ago
Sam has two options this weekend. He could work at his job and earn $9/hour for three hours, or he could go to a show at the the
taurus [48]

Answer: $57

Explanation:

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Opportunity cost of going to the theater:

Earning at work = $9 per hour × 3 hours

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Theater ticket cost = $30

Therefore, total opportunity cost of going to the theater is as follows;

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4 0
3 years ago
A parent or guardian taking care of a child by providing food, shelter and clothing is showing
kogti [31]

Answer:

Responsibility

Explanation:

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On January 1, Concord Corporation had 113000 shares of $10 par value common stock outstanding. On March 17 the company declared
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Answer and Explanation:

The Journal entry is shown below:-

March 17

Stock Dividend Dr, $84,750 (113,000 × 5% × $15)

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(Being stock dividend is recorded)

Here we debited the stock dividend and we credited the Common Stock Dividend Distributable and Paid in capital in excess of Par - Common Stock

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I would recommend for this customer a mix of investment grade bonds and cash or cash equivalents.

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Fixed earnings is a funding method focused on the maintenance of capital and earnings. It commonly includes investments like government and corporate bonds, CDs, and cash marketplace finances. fixed income can offer a consistent stream of earnings with less risk than stocks.

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