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Andrews [41]
3 years ago
7

The Hype Company's currently outstanding bonds have a 10 percent coupon and a 11 percent yield to maturity. Hype believes it cou

ld issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 38 percent, what is Hype's after-tax cost of debt
Business
1 answer:
zavuch27 [327]3 years ago
5 0

Answer:

After tax cost of debt is 6.82%

Explanation:

Currently the yield to maturity is the  pre-tax cost of debt for Hype company, however the after tax cost of debt considers that the bonds are tax deductible , its actual is less than the pre-tax cost of debt , hence the after-tax cost of debt is shown below

After tax cost of debt=yield to maturity *(1-tax)

after tax cost of debt=11%*(1-0.38)

after tax cost of debt=11%*0.62

after tax cost of debt =6.82%

This confirms that cost of debt is usually lower than cost of equity , where shareholders would want an extra premium to compensate them for the increased risk taken by investing in the business.

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Suppose a brand has a heavy usage index of 1.5, penetration share of 0.6 and a market share of 15%. What is the share of wallet
Anettt [7]

Answer:

0.167

Explanation:

Given the following :

Heavy usage index = 1.5

Penetration share = 0.6

Market share = 15%

Using the formula:

Heavy usage index =

market share % / [Penetration share * share of wallet]

1.5 = 15% / [0.6 * share of wallet]

1.5 × [0.6 × share of wallet] = 15%

0.9 × share of wallet = 15%

Divide both sides by 0.9

Share of wallet = 15% / 0.9

Share of wallet = 0.15 / 0.9

Share of wallet = 0.16666

Share of wallet = 0.167

3 0
3 years ago
Many organizations choose to accomplish aggregate planning on the basis of _____ and _____ methods. Multiple Choice spreadsheet;
Degger [83]

Majority of organizations choose to accomplish aggregate planning on the basis of simulation and experience methods.

<h3>What is an aggregate planning?</h3>

This refers to the process of developing and maintaining a schedule of the overall operations of an organization.

Most organization uses an aggregate planning to achieve their financial goals and improve the bottom line.

Therefore, the Option C is correct.

Read more about aggregate planning

<em>brainly.com/question/18803972</em>

#SPJ1

5 0
2 years ago
If a bank benefits when a foreign currency declines in value, then the bank must be in a __________ position. The term below tha
Rzqust [24]
Short position (I think you were supposed to add answers)
8 0
2 years ago
Perdue Company purchased equipment on April 1 for $38,880. The equipment was expected to have a useful life of three years, or 5
finlep [7]

Answer:

See explanation section.

Explanation:

Requirement 1

We know,

Depreciation expense under the straight-line method = (Cost price - residual value) ÷ useful life

The depreciation expense under the straight-line method remains same in every year.

December 31, Year 1 - depreciation expense = ($38,880 - $1,080) ÷ 3 years.

Depreciation expense = ($37,800 ÷ 3)

Depreciation expense = $12,600

Depreciation expense for year 1 = $12,600 × 9 ÷ 12

Depreciation expense for year 1 = $9,450

Requirement 2

The depreciation expense under the straight-line method remains the same every year.

Year 2 depreciation expense = ($38,880 - $1,080) ÷ 3 years = $12,600

Year 3 depreciation expense = ($38,880 - $1,080) ÷ 3 years = $12,600

Year 4 depreciation expense = ($38,880 - $1,080) ÷ 3 years = $12,600

The equipment will be dissolved after 4 year with a residual value of $1,080.

Requirement 3

The depreciation expense under units-of-activity method = [(Cost price - residual value) ÷ Total operating hours] × usage during the period.

Given,

Cost price = $38,880

residual value = $1,080

Total operating hours =  5,400

Putting the values into the formula, we can get

Depreciation expense rate = ($38,880 - $1,080) ÷  5,400

Depreciation expense rate = $37,800 ÷ 5,400

Depreciation expense rate = $7 per hour.

Depreciation expense for year 1 = $7 per hour × 1,000

Depreciation expense for year 1 = $7,000

Requirement 4

We get from requirement 3

Depreciation expense rate = $7 per hour.

Year 2 Depreciation expense = $7 per hour.

Depreciation expense for year 2 = $7 per hour × 1,900 hour.

Depreciation expense for year 2 = $13,300 hour.

Year 3 Depreciation expense = $7 per hour.

Depreciation expense year 3 = $7 per hour ×  1,600 hour.

Depreciation expense year 3 = $11,200 hour.

Year 4 Depreciation expense = $7 per hour.

Depreciation expense year 4 = $7 per hour ×  900 hour.

Depreciation expense year 4 = $6,300 hour.

Requirement 5

Depreciation rate under the double-declining-balance method = (100% ÷ useful life) ÷ 2

Depreciation rate = (100% ÷ 3 years) × 2

Depreciation rate = 66.67%

Depreciation expense for year 1 = cost price × depreciation rate

Given,

cost price = $38,880

depreciation rate = 66.67%

Putting the values into the formula, we can get

Depreciation expense for year 1 = cost price × depreciation rate

Depreciation expense for year 1 = $38,880 × 66.67%

Depreciation expense for year 1 = $25,921

Requirement 6

In double-declining-balance method, depreciation expense is decreasing.

Book value of year 1 after depreciation = Cost price - year 1 depreciation expense =  $38,880 - $25,921 = $12,959

Depreciation expense for year 2 = Book value of year 1 × depreciation rate.

Depreciation expense for year 2 = ($12,959 × 66.67%) = $8,640

Book value of year 2 after depreciation = Book value of year 1 - Depreciation expense for year 2 = $12,959 - $8,640 = $4,319

Depreciation expense for year 3 = Book value of year 2 × depreciation rate.

Depreciation expense for year 3 = $4,319 × 66.67% = $2,879.50

Book value of year 3 after depreciation = Book value of year 2 - Depreciation expense for year 3 = $4,319 - $2,879.50 = $1,439.5

Depreciation expense for year 4 = Book value of year 3 × depreciation rate.

Depreciation expense for year 4 = $1,439.5 × 66.67% = $960

4 0
2 years ago
Ziegler Inc. has decided to use the high-low method to estimate the total cost and the fixed and variable cost components of the
telo118 [61]

Answer:

a. $175.50 and $11,060,000

b. $31,242,500

Explanation:

The computation of the fixed cost and the variable cost per unit by using high low method is shown below:

Variable cost per units = (High total cost - low total cost) ÷ (High units produced - low units produced)

= ($32,120,000- $25,100,000) ÷ (120,000 units - 80,000 units)

= $7,020,000 ÷ 40,000 units

= $175.50

Now the fixed cost equal to

= High total cost - (High units produced × Variable cost per unit)

= $32,120,000 - (120,000 units × $175.50)

= $32,120,000 - $21,060,000

= $11,060,000

Now the estimated total cost is would be

= Fixed cost + expected units of production × variable cost per unit

= $11,060,000 + 115,000 units × $175.50

= $11,060,000 + $20,182,500

= $31,242,500

5 0
3 years ago
Read 2 more answers
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