Answer:
4.51%
Explanation:
First, find the yield to maturity(YTM) of the bond; this would be the pretax cost of debt.
Using a financial calculator, input the following;
Face value of the bond ; FV = 1000
Semiannual coupon payment; PMT = (8%/2)*1000 = 40
Present value of bond; PV = -1050
Time to maturity; N = 20*2 = 40 semiannual payments
then compute semi-annual interest rate ; CPT I/Y = 3.756%
The pretax cost of debt = 3.756% *2 = 7.51%
After tax-cost of debt is used for WACC calculation and is therefore as follows;
7.51%(1-0.40) = 4.51%
Answer:
He would probably need to deposit 35k
Explanation:
He would need to deposit 35k cause the other 45k would be used to buy stuff like food clothes etc. And thats the recommended amount to deposit
Answer:
a. option Is the correct answer right
Answer:
B. Reduces risk associated with imperfect information.
Explanation:
The correct answer is B. Reduces risk associated with imperfect information. The bank requires a borrower to have a cosigner or collateral when lending funds to the borrower which reduces the risk of imperfect information and acts as guarantee. Cosigner is a person who is held liable if the borrower of the loan funds is unable to pay the loan amount.
