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topjm [15]
3 years ago
5

Hydro Systems has 15-year bonds outstanding with a coupon rate of 6 percent. Interest is paid annually. The face amount of each

bond is $1,000. What is the company's pre-tax cost of debt if the bonds currently sell for $1,080?
A) 5.22 percent
B) 5.55 percent
C) 4.71 percent
D) 5.36 percent
E) 4.42 percent
Business
1 answer:
Leya [2.2K]3 years ago
7 0

Answer:

A) 5.22 percent

Explanation:

The Pretax cost of debt is the Yield to maturity (YTM) of bond.

Using a financial calculator , you can solve for the YTM with the following inputs;

Face value ; FV = 1000

Maturity of bond; N = 15

Annual coupon payment; PMT = coupon rate * Face value =  6%*1000 = 60

Current price; PV = $1,080

then compute annual interest rate; CPT I/Y = 5.22%

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D) introduction, body, and conclusion

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<h3>What are Company Values? </h3>

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Hence, we can see that from the complete information, there is a scandal at Starbucks where two black men have led away from the premises because of their race.

The CEO of Starbucks, Mr. Kevin Johnson immediately apologized and stated that the action was unfortunate and did not in any way reflect the company values of Starbucks as everyone was welcome.

Read more about company values here:

brainly.com/question/24553900

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7 0
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