An industrial manufacturer that works with one or a few large clients and develops products that only these clients will use is
1 answer:
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Answer:
6.53%
Explanation:
For computing the after cost of debt we need to use the RATE formula i.e to be shown in attached spreadsheet. Kindly find it below:
Given that,
Present value = $1,050.76
Future value or Face value = $1,000
PMT = 1,000 × 10% = $100
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying this above formula
1. The pretax cost of debt is 8.70
2. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 8.70% × ( 1 - 0.25)
= 6.53%
Answer:
4.20%
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 = $1,150
Future value = $1,067.50
Assuming Par value = $1,000
PMT = 1,000 × 6.35% = $63.50
NPER = 5 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the rate of return is 4.20%
