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
HACTEHA [7]
3 years ago
12

Hi Tech Products has 35,000 bonds outstanding that are currently quoted at 102.3. The bonds mature in 11 years and carry a 9 per

cent annual coupon.
What is the firm’s after-tax cost of debt if the applicable tax rate is 35%?

A) 4.47% B) 4.79% C) 5.63% D) 5.98% E) 6.31%
Business
1 answer:
vladimir1956 [14]3 years ago
7 0

Answer:

C) 5.63%

Explanation:

First we have to find the pretax cost of debt of the firm in order to find it's after tax cost of debt.

We know the price of the bond is $102.3, its future value or par value is $100, the  number of periods are 11 as it is annual coupon bond with a maturity of 11 years and the coupon payment each year is (0.09*100)= $9. We can input these values in a financial calculator to find the bonds ytm or cost of debt.

PV= 102.3

FV= -100

PMT=-9

N= 11

Compute I = 8.66

The pretax cost of debt is 8.66%

Now in order to calculate the after tax cost of debt we will use the formula

Pretax cost of debt *(1-tax rate)

=0.0866*(1-0.35)=0.05629= 5.629% rounded of to 5.63%

You might be interested in
The world price of a pound of almonds is $4.50. Before Uruguay allowed trade in almonds, the price of a pound of almonds there w
Lelechka [254]

Answer:

The correct answer is option B.

Explanation:

The world price of a pound of almonds is $4.50.

During autarky, the price of almonds in Uruguay is $3.

Once Uruguay opens trade with other countries, since the price of almonds is lower in Uruguay than the world price, Uruguay will export almonds to the world. With the opening up of trade, the price will rise to $4.50.

3 0
3 years ago
When Jack was first hired at Acme Global, he was assigned to a virtual mentoring group of new employees and managers before his
Anon25 [30]

Answer:

The answer to this question is  C. Training and Development

Explanation:

Assigning Jack to a virtual mentoring group to learn about the culture of ACME global is an example of how social media helps business.

Before resumption of duties, the New employees alongside Jack would have been familiarized with the environment they will be working in and would have been exposed to some required knowledge they are suppose to have about their jobs and about the organisation itself.

Hence the scenario above is an example of how social media is used in  Training and Development  

8 0
3 years ago
Faleye Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) f
larisa [96]
Vilolin bee is the greatest

8 0
3 years ago
Education is a good investment for an individual if
zepelin [54]

Answer:

The correct answer is the option E: All of these answers are correct.

Explanation:

On the one hand, the <em>discount rate</em> is the name given to the interest rate charged to the commercial banks and also to other financial institutions for the loans they take from the Federal Reserve Bank of The United States.

On the other hand, the education is always a good investment for the individuals in the cases where the workers with higher levels of education tend to earn higher wages and that obviously stimulates the action of study for one's future and also in the cases where the discount rate is favourable to the person and that will happen when is above zero or the number it releases shows that the present value of the benefits are equal or higher than the present value of the costs of the investment.

7 0
3 years ago
In the absence of a ricardo-barro effect, a government budget deficit ________ the demand for loanable funds, ________ the real
lubasha [3.4K]

Under the Ricardo-Barro theory, the government is possible to increase taxes in the future in order to pay back the money borrowed to finance a current <span>budget deficit. In a case where this effect is absent, the result would be:</span>

<span>
</span><span>A government budget deficit <u>will increase</u> the demand for loanable funds, <u>increase</u> the real interest rate, and <u>decrease</u> the investment.</span>

5 0
3 years ago
Other questions:
  • Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $11.00; direct labor, $25.00,
    12·1 answer
  • Paul Sabin organized Sabin Electronics 10 years ago to produceand sell several electronic devices on which he had securedpatents
    9·1 answer
  • Suppose taxpayers are given a one-time only rebate on previous taxes paid. If consumers spend all of their tax rebate checks, wh
    8·1 answer
  • Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 9%,
    13·1 answer
  • Harbour View Company common stock has a $30 par value and is currently selling for $65. Industry analysts are predicting dividen
    11·1 answer
  • An agent's client calls on Monday to discuss the current market situation. They discuss how 100 shares of KAPCO common stock wou
    9·1 answer
  • If you were starting a new business, describe at least three departments to the company that you would need right away. Why are
    10·1 answer
  • Which of the following statements regarding SPT and WSPT is INCORRECT?
    7·1 answer
  • The Elmo Company purchased equipment on January 1, Year 1 at a cost of $26,000. The equipment was estimated to last for 8 years
    15·1 answer
  • all are the major steps described by the risk management framework to information and privacy risk management except for which o
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!