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olga_2 [115]
3 years ago
14

A company is going to issue a $1,000 par value bond that pays a 5% annual coupon. The company expects investors to pay $684.5 fo

r the 20-year bond. The expected flotation cost per bond is $50, and the firm is in the 45% tax bracket. Compute the firm's after-tax cost of new debt. Round your calculations to the nearest 0.01%. Group of answer choices
Business
1 answer:
Sliva [168]3 years ago
5 0

Answer:

After tax cost of debt is 4.96%

Explanation:

In order to compute the after-tax cost of debt, the yield to maturity to maturity which is pre-tax cost of debt needs to determined first of all using the rate formula in excel as provided below:

=rate(nper,pmt,-pv,fv)

nper is the time to maturity of the bond which is 20 years

pmt is the annual coupon receivable by investors $1000*5%=$50

pv is the current price of the bond less flotation cost per bond i.e($684.5-$50)=$634.5

fv is the future value of $1000 per bond

=rate(20,50,-634.5,1000)

rate=9.01%

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

                                   =9.01% *(1-0.45)

                                    =4.96%

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Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of sell
Ber [7]

Answer:

Item           Inventory at the lower-of-cost-or-market

 #1                                    $214.50

 #2                                  $240.00

 #3                                  $266.50

 #4                                   $315.00

 #5                                  $422.50

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question. See attached pdf file for the complete question.

Also note: See the attached excel file for the determination of the value of inventory by applying the lower-of-cost-or-market rule.

From the attached excel file, we have:

Item           Inventory at the lower-of-cost-or-market

 #1                                    $214.50

 #2                                  $240.00

 #3                                  $266.50

 #4                                   $315.00

 #5                                  $422.50

Download xlsx
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> xlsx </span>
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> pdf </span>
4 0
3 years ago
In 2018, preferred shareholders elected to convert 4.58 million shares of preferred stock ($39 million book value) into common s
In-s [12.5K]

Answer:

The answer is given below;

Explanation:

Preferred Stock   Dr.$39,000,000

Common Stock    Cr.$33,000,000

Paid in capital in excess of par-Common stock  (39,000,000-33,000,000)        Cr.$6,000,000  

As the book value of preferred stock is greater than the price paid at the time of conversion into common stock,therefore excess amount is paid in capital in excess of par for common stocks.As the preferred stock is reduced by their book value,therefore it is debited and common stock is credited with its cost.  

5 0
3 years ago
Respond by (1) Identifying the type of syllogism below (Categorical, Disjunctive, Conditional) and (2) explain, in your own word
USPshnik [31]

The type of syllogism being used in the given sentence is a conditional syllogism.

<h3>What is Syllogism?</h3>

This refers to the use of reasoning in order to draw conclusions about something based on two premises.

Hence, we can see that conditional syllogism was used in the given premises and this is because it made use of either-or to show that if the sidewalk was wet, then that means that it must have rained.

This reasoning is faulty because there are different possible reasons for the sidewalk to be wet and not just rainfall.

Read more about syllogism here:
brainly.com/question/361872

6 0
2 years ago
Blank is the deadline for filing both federal and state income tax returns.
Kay [80]

Answer:

April 15th

Explanation:

5 0
3 years ago
Mark currently has a balance of $973.70 in an account he has held for 17 years. He opened the account with an initial deposit of
IrinaK [193]

Answer:

Simple interest= $273.7

Explanation:

<em>Simple interest is the interest on earned on the principal amount invested only. Kindly note that under this system, only the principal amount invested would earn interest over the course of the investment period</em>

<em> Simple interest is calculated as follows:</em>

Simple interest = Principal × Rate × Time

or

Simple interest = Future sum - Principal amount invested

DATA

Future sum- $973.70

Principal amount invested-700

Simple interest = 973.70 - 700=273.7

Simple interest= $273.7

5 0
3 years ago
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