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n200080 [17]
3 years ago
9

Ladder Works has debt outstanding with a coupon rate of 6 percent and a yield to maturity of 6.8 percent. What is the aftertax c

ost of debt if the tax rate is 21 percent
Business
1 answer:
damaskus [11]3 years ago
8 0

Answer:

5.372%

Explanation:

Given that

Coupon rate = 6 percent

Yield to maturity = 6.8%

Tax rate = 21 percent

So by considering the above information, the after tax cost of debt is

= Yield to maturity × (1 - tax rate)

= 6.8% × (1 - 0.21)

= 5.372%

We simple multiply the yield to maturity with the after tax rate so that the approximate cost of debt could come

Ignored the coupon rate as it is not relevant for the above computation

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Inventing a new soft drink  -what would be the input - the conversion, and the output?

The input would be the taste/flavor of the new soft drink. When inventing something new, you need to figure out something that will give it a distinct difference over competition. After you have established what you want it to taste like, you need to make the receipe and try it to make sure you like it and can replicated it for consumers. Once the drink has been made for test tasting, having people try the drink will establish whether or not they want to purchase the drink. Once the entire drink has been through the processes of test tasting, if there is good feedback it's time to put the product on the the self as the output.

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3 years ago
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Jackie’s Coffee is a sit-down café with a wait staff that takes customers’ orders. Jackie's competitor, Johnny's Coffee Shack, s
Pani-rosa [81]

Answer:

differentiated by quality/design

Explanation:

In this scenario the two coffee shops have different strategies for sale. While Jackie's coffee is a sit down cafe with a waiter service that takes personalised orders, Johnny's coffee sells at various kiosks it owns.

These two businesses are differentiated by quality or design. Jackie's has more quality because of the personalised service provided to customers.

Jackie uses design of a sit down cafe in one location, while Johnny's business design is to sell coffee at various locations (kiosks)

3 0
4 years ago
Issuing a $1,000 par value bond with a yield to maturity of 10%. The company is in a 35 percent marginal tax bracket. What will
san4es73 [151]

Answer:

6.50%

Explanation:

The after-tax cost of the debt is the yield to maturity after having deducted the tax shield which is computed using the formula below:

after-tax cost of debt=pretax cost of debt*(1-tax rate)

pretax cost of debt=yield to maturity=10%

tax rate=35%

The after-tax cost of debt=10%*(1-35%)

The after-tax cost of debt=10%*65%

The after-tax cost of debt=6.50%

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The shadow banking system refers to Group of answer choices nonbank financial institutions such as investment banks and hedge fu
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Answer: nonbank financial institutions such as investment banks and hedge funds

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4 years ago
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Consider the following scenario analysis:
seropon [69]

Based on the scenario analysis on stocks and bonds, we know the following:

  • Treasury bonds will provide a higher return in a recession than in a boom.
  • The expected return of Bonds is 9.8% and that of stocks is 11.6%.
  • The standard deviation of Bonds is 9.24% and that of stock is 11.76%.

<h3>What does the scenario analysis on Bonds and Stocks show?</h3>

In a recession, Bond returns will be 15%. This is much higher than Bond returns in a boom of only 5%.

The expected return on bonds will be:

= ∑(Probability of Scenario x Returns in scenario)

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Using a spreadsheet, you can input the expected returns of the stocks and the bonds to find the standard deviation to be 9.24% and 11.76%, respectively.

Find out more on stock expected returns at brainly.com/question/18724022.

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2 years ago
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