Answer:
the annual pre-tax cost of debt is 10.56%
Explanation:
the beore-tax component cost of debt will be the actual market rate of the bonds, as they offer an interest rate of 11% but are selling at 104 points not at par thus, there is a difference between the rates.
We solve for the rate which makes the coupon and maturity 104
with excel or a financial calculator
PV of the coupon payment
C 5.500 (100 x 11%/2)
time 60 (30 years x 2 payment per year)
rate <em>0.052787474</em>
PV $99.4338
PV of the maturity
Maturity 100.00
time 60.00
rate <em>0.052787474</em>
PV 4.57
<em><u>Adding both we should get 104 which is the amount the bonds is selling:</u></em>
PV coupon $99.4338 + PV maturity $4.5662 = $104.0000
The rate is generated using goal seek or wiht a financial calculator.
This rate is a semiannual rate, so we multiply by 2 to get the annual cost of debt:
0.052787474 x 2 = 0.105574947
The cost of debt for the firm is 10.56%
Answer: $322,000
Explanation:
Consolidated income = Net income from Ackerman + Net Income from Brannigan + Excess depreciation - Amortization of unpatented tech - Gain from transfer of equipment
Excess depreciation = New depreciation of equipment - Old depreciation
Depreciation is straight line;
= (200,000/5 years) - (110,000/5)
= $18,000
Gain from transfer of equipment
= Sales - Book value
= 200,000 - 110,000
= $90,000
Consolidated income = 300,000 + 98,000 + 18,000 - 4,000 - 90,000
= $322,000
Answer:
Mitigate his damages
Explanation:
By law, mitigation involves making effort to reduce losses. Now, an individual claiming damages or losses due to break in contract or a wrongful act by another individual has a duty under the law to mitigate those damages. That is to say, the plantiff is under a duty under the law to reduce the loss by taking advantage of any opportunity arising that may help.redice the losses or damages. However, in this case, the plantiff, who's the landlord Henry did not mitigate the loss by not attempting to or renting the accommodation out for the remaining six month. Thus, the damages would likely be reduced because he failed to mitigate his damages as he should have done as required under the law.
