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Eddi Din [679]
3 years ago
5

Too Young, Inc., has a bond outstanding with a coupon rate of 7 percent and semiannual payments. The bond currently sells for $9

51 and matures in 23 years. The par value is $1,000. What is the company's pretax cost of debt?
Business
1 answer:
Llana [10]3 years ago
5 0

Answer:

The company's pretax cost of debt is 7.45 %.

Explanation:

When it comes to bonds, the cost of debt is the required return on the bond known as the Yield to Maturity (YTM) of the bond.

The Yield to Maturity (YTM) of the bond can be determined as follows :

N = 23 × 2 = 46

PV = $951

Pmt = ($1,000 × 7 %) ÷ 2 = - $35

P/YR = 2

FV = - $1,000

YTM = ?

Using a Financial Calculator, the Yield to Maturity (YTM) of the bond is 7.4484 or 7.45 %

Therefore,

The company's pretax cost of debt is 7.45 %.

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"Consider a C corporation. The corporation earns $2.5 per share before taxes. After the corporation has paid its corresponding t
Advocard [28]

Answer:

$0.70 per stock

Explanation:

before tax corporate income = $2.50 per stock

after tax corporate income = $2.50 x (1 - 30%) = $1.75 per stock

distributed dividends = $1.75 x 50% = $0.875 per stock

since the tax rate on dividends is 20%, then the after tax gain earned by stockholders is $0.875 x (1 - 20%) = $0.70 per stock

Some dividends are taxed as long term capital gains (like these), which decreases the tax rate paid by stockholders. If they were taxed at the normal income rate, the tax rate would have been 8% higher.

4 0
3 years ago
The project administrator is preparing a preliminary budget for a project and adds in the cost of a new computer for the project
Lemur [1.5K]

Answer:

The correct answer is b. Direct.

Explanation:

The computer is considered a direct cost because it is essential in the development of the project. For each phase of the same it is required to analyze the information in order to outline the study, and for this reason it is considered as a resource that will be used directly until the completion of the project.

5 0
3 years ago
Read 2 more answers
An employee earns $28 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. If the employee worked 55 h
Gemiola [76]

Answer: Gross pay- $1750.00

Net pay - $1,215.75

Explanation: Gross pay = Nomal time =$28*40= $1,120. Overtime = $28*1.5*15= $630 Total= $1,750

Net pay = $1,750 less Security tax, Medicare tax, federal income tax withheld.

$1750* 6.0%= $105

$1750* 1.5% = $26.25

Tax withheld= $403

Net pay= $1,750-$105-$26.25-$403

= $1,215.75

8 0
3 years ago
Which one of the following statements is correct? Question 19 options: A longer payback period is preferred over a shorter payba
stich3 [128]

Answer:

The payback period ignores the time value of money.

Explanation:

This could primarily be classified to be amongst the major disadvantages of the payback period that it ignores the time value of money which is a very important business concept. In the other hand, the payback period disregards the time value of money. It is determined by counting the number of years it takes to recover the funds invested. Some analysts favor the payback method for its simplicity. Others like to use it as an additional point of reference in a capital budgeting decision framework.

The payback period does not account for what happens after payback, ignoring the overall profitability of an investment.

8 0
3 years ago
Which of the following is not an advantage of using conventional crude oil as an energy source? a.ample supply for several decad
Annette [7]

Answer:

The correct answer is letter "D": environmental costs included in market price.

Explanation:

Oil and other resources like natural gas are used as fuel and energy sources. However, <em>the environmental cost of extracting them is not included in the market price</em>. If that would happen, prices of those sources would not be accessible to regular consumers.  

The exploitation of oil emits methane which is a gas even more harmful to the environment than carbon dioxide. Governments in most cases regulate the oil exploitation considering the environmental impact of that activity.

3 0
3 years ago
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