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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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The net income as shown on the common-size income statement of Omega industries for the past three years increased from 3% to 6%
vlada-n [284]

Answer:

See explanation section

Explanation:

Req. A & B

If there is an increase in the net income over the year, the company is in profitability condition. As Omega industries are getting increased net income, it suggests their profitability.

EVM or enterprise value multiplier allows a company to compare the capital structure that the company uses. It is commonly used for valuing a business.

Req. C, D & E

In a financial plan, if the sales increase, it should be because of increasing working capital and fixed assets. We know, additional assets can generate more revenues.

A firm can collect approximately 8% of its annual sales at any given time. It can be found through the following way-

since the days' sales in receivables for 30 days in a year, the percentage of annual sales = (30 ÷ 365) × 100 = 8.22% or 8%

3 0
3 years ago
A client is unconscious and experiencing increasing intracranial pressure. What type of diuretic will the client most likely be
ElenaW [278]

Answer:

osmotic diuretic

Explanation:

Osmotic diuretic -

It refers to the type of diuretic , which resists the absorption of the sodium and water , is referred to as osmotic diuretic .

In simple terms , it refers to the condition of increased urination , where additional water comes out along with urine .

The reason for Osmotic diuresis can be -

Higher level of sugars in blood .

As the client is facing the issue of increased intracranial pressure , where the amount of fluid around the brain is reduced  which is a fatal condition , so in order to avoid this condition , Osmotic diuretic is given , so that the excess fluid can comes out with urine .

Hence , the correct term is osmotic diuretic .

7 0
3 years ago
Anastasia was trying to decide which investment plan would be best over 10 years. Bank A was offering 8.5% simple interest on he
mario62 [17]

Answer: Bank B is the better investment. In 10 years, her $2,000 will grow to $4,317.85, and with bank A, her $2,000 will grow to $3,700.

Explanation:

Bank A was offering 8.5% simple interest. $2000 with 8.5% simple interest. = A = P(1 + rt)

A = 2000(1+(0.085*10))

= 2000(1+0.85)

= 2000(1.85)

= 3,700

Bank B was offering 8% compounded annually

= A = P(1+r/n)^nt

A= 2000(1+8%/1)^1*10

A= 2000(1+0.08)^10

A= 2000(1.08)^10

A= 2000*2.1589

= 4,317.85

8 0
3 years ago
Read 2 more answers
A company reports the following amounts at the end of the year:
Inga [223]

Answer:

33.33%

Explanation:

Given:

Sales revenue = $360,000

Cost of goods sold = $240,000

Net income = $53,000

Now,

the gross profit = Sales revenue - Cost of goods sold

or

The gross profit = $360,000  - $240,000  = $120,000

Thus,

the company's gross profit ratio = \frac{\textup{Gross Profit}}{\textup{Sales revenue}}

or

The company's gross profit ratio =  \frac{120,000}{\textup{360,000}

or

The company's gross profit ratio = 33.33%

8 0
3 years ago
The hourglass model for structuring effective business presentations suggests you should:_______.
mrs_skeptik [129]

Answer:

Begin and end your presentation with motivating context

Explanation:

Just as the hourglass is shaped with a large top, narrow middle and a large bottom. Presentations should start on a general and motivational context.

The middle of the presentation should focus on some details and procedures on how to achieve set goals and objectives of the topic. This is where practical steps are given to the audience.

The end of the presentation should again be a motivational context again. The audience is made to see the big picture of the situation.

6 0
3 years ago
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