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MAVERICK [17]
3 years ago
10

Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 11 years to maturity that is

quoted at 104 percent of face value. The issue makes semiannual payments and has a coupon rate of 4 percent annually.a. What is Advance's pretax cost of debt?b. If the tax rate is 35 percent, what is the aftertax cost of debt?

Business
1 answer:
Usimov [2.4K]3 years ago
5 0

Answer:

a. 3.56%

b. 2.31%

Explanation:

In this question, we use the Rate formula which is shown in the spreadsheet.  

The NPER represents the time period.

Given that,  

Present value = $1,040

Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 4% ÷ 2 = $20

NPER = 11 years × 2 = 22 years

The formula is shown below:

= Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

So, after solving this,

1. The pretax cost of debt is = 2 × 1.78% = 3.56%

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 3.56% × ( 1 - 0.35)

= 2.31%

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Answer:

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Explanation:

1. Preparation for the statement of comprehensive income using the one statement format

Splish Corporation Statement of Comprehensive IncomeFor the Year Ended December 31, 2020

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Gross profit $505,100

Less Selling and administrative expenses ($329,500)

Net income $175,600

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Add Unrealized holding gain on available-for-sale debt securities $16,600

Comprehensive income $192,200

Therefore the Comprehensive income for the statement of comprehensive income using the one statement format will be $192,200

2. Preparation a statement of comprehensive income using the two statement format

Splish Corporation Statement of Comprehensive IncomeFor the Year Ended December 31, 2020

Sales revenue $1,242,800

Less Cost of goods sold ($737,700)

Gross profit $505,100

Less Selling and administrative expenses ($329,500)

Net income $175,600

($505,100-$329,500)

Comprehensive Income

Net Income $175,600

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Comprehensive income $192,200

Therefore the Comprehensive income for the statement of comprehensive income using the two statement format will be $192,200

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Higher customer satisfaction and more efficient use of resources are impacts of businesses that operate with a _______
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The balance sheet of Subsidiary shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and
Andrews [41]

Answer:

b. $20,000

Explanation:

Goodwill = Investment in Subsidiary - (Asset With book value - Liability with book value) - (Fair value of Asset - Book value of Asset)

Goodwill = $95,000 - ($86,400 - $15,000) - ($90,000 - $86,400)

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Calculate gross profit for the following situation: National Storage Company had sales of $1,000,000, sales discounts of $2,500,
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Therefore the gross profit can be calculated as follows

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The difference between consultative leadership and participative leadership in decision making is that in consultative leadership employees do not have decision-making power they can only share their opinions but in participative leadership, everyone works together for decision making.

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Consultative leadership fashion is set growing the capacity to persuade people in place of enforcing their authority on them, enticing the subordinates or employees efficiently in the decision making. Such leaders ask humans for their minds & permit them to technique the problem and locate a nice feasible solution. The consultative chief uses the talents, thoughts, and enjoyment of others, however, the final choice is made by using a leader. Such a leader has interacted with his time or more important tasks, gives proper popularity, and evaluates all the alternatives before making the very last choice.

The participative leader entails himself because a member of the group & makes choices alongside the group. Such a leader seeks consensus and all and sundry have to take possession within the final decision. In a participative management fashion team participants and leaders, thoughts are taken into consideration as identical, and the body's input is considered. right here leader is a facilitator, educates, and frequently embraces crew thoughts over their very own, creating a tradition of innovation and focusing on promoting creativity.

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