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Butoxors [25]
2 years ago
7

, suppose the book value of the debt issue is $70 million. In addition, the company has a second debt issue on the market, a zer

o coupon bond with 12 years left to maturity; the book value of this issue is $100 million and the bonds sell for 61 percent of par. What is the company’s total book value of debt? The total market value? What is your best estimate of the aftertax cost of debt now? (Assume that semi-annual compounding is used for the zero-coupon bond.)
Business
1 answer:
vlada-n [284]2 years ago
5 0

Answer: See explanation

Explanation:

a. The company's total book value of debt will be:

= Value of debt + Value of zero coupon bonds

= $70 million + $100 million

= $170 million

b. The market value will be:

= Quoted price × Par value

= ($70 × 1.08) + ($100 × 0.61)

= $75.6 + $61

= $136.6 million

c. The aftertax cost of debt will be:

= (1 - Tax rate) × Pre tax cost of debt

= (1 - 35%) × 5.7%

= 65% × 5.7%

= 3.7%

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The ______________ ______________ is the result of a series of events that grew out of a perceived need relating to organized re
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3 years ago
Healthy Measures Inc. produces a Bath and Gym version of its popular electronic scale. The anticipated unit sales for the scales
lesantik [10]

Answer:

Explanation:

Production budget is a schedule of the number of units of goods that are to be produced using a forecast sales amount and the level of the opening and closing inventory

                                            Bath Scale                       Gym Scale

Northern region                     25,500                              33,300

Southern region                     27,500                              28,900

Total                                        53,000                               62,200  

Opening inventory                  (1,200)                                ( 2,500 )

Closing inventory                     900                                     2,700    

Total units to be produced     52,700                               62,400

Bath scale = 53000+900 -1200 = 52700

Gym scale = 62200+ 2700-2500 =62,400

           

7 0
3 years ago
16. A government constructed a bridge 20 years ago at a cost of $30 million. The replacement cost of the bridge today would be $
Contact [7]

Answer:

$20 million

Explanation:

The net of accumulated depreciation is the cost of the road minus accumulated depreciation till date.

Accumulated depreciation=yearly depreciation* 20 years

yearly depreciation=cost/useful life

cost is $30 million

useful life is 60 years

yearly depreciation=$30 million/60 years=$500,000 per yer

accumulated depreciation=$500,000*20=$10 millon

net of accumulated depreciation=$30 million-$10 million

net of accumulated depreciation=$20 million

As a result,option A is the correct answer

8 0
3 years ago
Gertrude takes out a $5,500 subsidized Stafford loan, which must be paid back in ten years. Gertrude will graduate four years af
Natasha2012 [34]

The interest is the amount of payment that is given by the borrower to the lender of money, it is the excess amount that is paid for the use of money.

The amount of interest that Gertrude would pay is $2,908 to repay the total amount of the loan.

<h3>What is interest?</h3>

Interest is the monetary charge for acquiring money, and it is mostly shown as a percentage, such as an annual percentage rate (APR).

Interest is the excess amount that is paid by the lender to use his money on a certain percentage, and it is repaid with the amount of principal.

<u>Computation </u><u>of Interest:</u>

Given that,

Principal(P) = $5,550,

Interest Rate(i) = 6.8%,

\text{i} = \dfrac{6.8}{12\times100}\\\\\text{i} =0.005667

Number of monthly Installments(n)= 10×12 = 120.

Here, we apply the formula of E.M.I (Equated Monthly Installment):

\text{E.M.I.}= \dfrac{P\times i\times (1+i)^n}{(1+i)^n-1}\\\\\\\text{E.M.I.}=\dfrac{\$5,500\times 0.005667\times (1+0.005667)^1^2^0}{(1+0.005667)^1^2^0-1}\\\\\\\text{E.M.I.}=\$63.29

Here, the total installments of the loan are 120,

then the amount of total payment would be:

120\times\$63.29= \$7,594

Then, the amount of interest that is paid on the loan would be:

\text{Amount -Principal}= \text{Interest}\\\\\$7,594.28-\$5,500= \$2,094.28\\\\\\\text{Interest}= \$2,094.28

Therefore, the total amount of interest that Gertrude has to pay is $2,097.28.

Learn more about interest, refer to:

brainly.com/question/4605117

8 0
2 years ago
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