1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Stella [2.4K]
3 years ago
6

Airborne Airlines Inc. has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest pa

yment of $106 and is currently selling for $860. Airborne is in a 40 percent tax bracket. The firm wishes to know what the aftertax cost of a new bond issue is likely to be. The yield to maturity on the new issue will be the same as the yield to maturity on the old issue because the risk and maturity date will be similar.
Business
1 answer:
ivann1987 [24]3 years ago
5 0

Answer:

7.52%

Explanation:

First and foremost ,the yield to maturity on the old issue is computed using the rate formula in excel as calculated below:

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

the nper is the number of times the bond would pay annual coupon interest of $106,which is 20 times

pmt is the amount of annual coupon payment which is $106

pv is the current price of the bond at $860

fv is the face value of the bond at $1000

=rate(20,106,-860,1000)=12.54%

The yield to maturity on the new issue is 12.54%  as well

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

pretax cost of debt is yield to maturity of 12.54%

t is the tax rate of 40% or 0.4

after-tax cost of debt=12.54% *(1-0.4)=7.52%

You might be interested in
Cecil budgets 1/6 of his weekly salary for comic books. Cecil's weekly comic book bill is $30.00. What is his weekly salary?
yulyashka [42]
$180

if 1/6=30, then we have to figure out 6/6. 1x6=6 so multiply 30 times 6. 180
7 0
3 years ago
The auto repair shop of Quality Motor Company uses standards to control the labor time and labor cost in the shop. The standard
GarryVolchara [31]

Answer:

1. Actual Hour = 145 hour

2. Actual rate per hour = 28.17 per hour

Explanation:

According to the scenario, computation of the given data are as follow:-

1). Labor Efficiency Variance= Labor Rate Variance + Labor Spending Variance

= 170 + 120

= 290

Labor Efficiency Variance = Standard Rate × (Standard Hour - Actual Hour)

-290 = 29 × (54 × 2.5-X)  

-290 = 29 × (135 - X)

-290 = 3,915 - 29x

29x = 4,205

X = 4205 ÷ 29 = 145

Actual Hour = 145 hour

2). Labor Rate Variance = Actual Hour × (Standard Rate-Actual Rate)

120 = 145(29-x)

120 = 4,205-145x

145x = 4,085

X= 4,085 ÷ 145

Actual rate per hour = 28.17 per hour

8 0
3 years ago
Which of the following would you classify as a structural adaptation of an animal?
eimsori [14]

Answer:

The answer is D I would say.

8 0
2 years ago
Read 2 more answers
LeGo Financials offer two investment plans. Investment A pays 9 percent interest compounded monthly, whereas Investment B pays 1
12345 [234]

9.38%; 10.25%

Explanation:

The annual rate rate of return is based on the amount of money earned or expended at year-end and is split at the start of the year into an initial investment. The annual returns or cumulative annual rate is also related to as this form.

For example, if you make monthly payments, divide by 12. 2. Multiply by the remaining balance of your mortgage which will be the entire principal for your first deposit. You must incur an excess amount by the amount of the value of your interest rate.

7 0
3 years ago
You want to borrow $91,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,750, but no
mel-nik [20]

Answer:

5.784%

Explanation:

PV = $91000

PMT = -$1750

N = 60

FV = $0

<em>Using the financial calculator to solve for I/Y</em>

Interest yield = CPT I/Y(91000, -1750, 60, 0)

Interest yield = 0.00482

Interest yield = 0.482%

Highest rate APR = 0.482%*12

Highest rate APR = 5.784%

So, assuming monthly compounding, the highest rate i can afford on a 60-month APR loan is 5.784%.

3 0
3 years ago
Other questions:
  • You own 850 shares of Western Feed Mills stock valued at $53.15 per share. What is the dividend yield if your total annual divid
    13·1 answer
  • Select the correct answer.<br> What is brainstorming?
    11·2 answers
  • The holding period return​ (HPR) of​ one's portfolio should be compared to investment goals
    9·1 answer
  • Cartels are corporations that control almost all of the production and sale of a single product.
    10·1 answer
  • The ease with which the customer can place and receive their order as well as other aspects of value that the sales staff provid
    8·1 answer
  • Process cost accounting is most appropriate when there is continuous production on a single product. when a company produces mor
    8·1 answer
  • Fifteen percent of the students in a school of Business Administration are majoring in Economics, 20% in Finance, 35% in Managem
    12·1 answer
  • Gruber Corp. pays a $9 dividend on its stock. The company will maintain this dividend for the next 3 years. In year 4, the divid
    6·1 answer
  • Describe one accountability issue of a business​
    7·1 answer
  • In order to have the range of services needed to fully care for a person or population, a healthcare organization may?
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!