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IRISSAK [1]
3 years ago
12

Mudvayne, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 18 years to maturity that is

quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually.
1. What is the companys pretax cost of debt?
2. If the tax rate is 35 percent, what is the aftertax cost of debt?
Business
1 answer:
aivan3 [116]3 years ago
4 0

Answer:

A. 5.42%

B. 3.52%

Explanation:

A. Calculation for the companys pretax cost of debt

Using this formula

Pretax cost of debt= [Coupon payment +(Face value - price/Number of years)]/[(Face value - price)/2]

Let plug in the formula

Pretax cost of debt = (6%+((100%-107%)/18 years))/((100%+107%)/2)

Pretax cost of debt = 5.42%

Therefore the Pretax cost of debt will be 5.42%

B. Calculation for the aftertax cost of debt

After tax cost of debt = 5.42%*(1-35%)

After tax cost of debt = 5.42%*65%

After tax cost of debt = 3.52%

Therefore the After tax cost of debt will be 3.52%

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The agreement made between different companies to charge the same amount for products or to not sell the products below a fixed price is known as <u>price-fixing.</u><u />

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Bramble Corp. factors $7200000 of its accounts receivables with recourse for a finance charge of 5%. The finance company retains
saul85 [17]

Answer:

See below

Explanation:

Given the above information, first we'll compute net proceeds

Cash received $7,200,000 × 86%

$6,192,000

Add:

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$648,000

Less;

Recourse obligation

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Net proceeds

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3 years ago
the role of the develpoed nation in helping the developing nations for sustainable develpoment of natural resources???pls help.
tigry1 [53]

Answer:

Developed nations have an economic and moral responsability to help developing contries achieve sustainable development goals not only because developed nations have more money, but also because they are the main originators of climate change.

For this reason, developed nations should give funds to developing nations in order to fund projects such as solar, wind, geothermal, and nuclear power plants, and they should also provide technical assistance, since the population of developed nations tends to be more educated than that of developing nations.

7 0
3 years ago
Drying times for newly painted microwave oven cabinets are normally distributed with a mean of 2.5 minutes and a standard deviat
Marina86 [1]

Answer: 3.22

Explanation:

Given that;

mean = 2.5 min

standard deviation = 0.25 min

now to get the value of X required, we say

z = (x - u) / a

where z is the distance from the mean measured in the standard deviation units, x is the value we are interested in, u is the mean distribution, a is the standard deviation of the distribution.

the time delay should be just enough to allow 99.8% of the cabinets to dry completely = 99.8/100 = 0.9980

first we determine an appropriate z value.

Using the standardized normal tables,

value of z for approximately 0.9980 is 2.88

so using our initial equation z = (x - u) / a

we substitute the value

z = (x - u) / a

2.88 = ( x - 2.5) / 0.25

2.88 * 0.25 = x - 2.5

0.72 = x - 2.5

x = 0.72 + 2.5

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3 years ago
Suppose the current market price of corn is $3.75 per bushel. Your firm has a technology that can convert 1 bushel of corn to 3
Aleks04 [339]

Answer:

At 1.783 or more, the conversion yield better gain than sales the corn

Explanation:

The ethanol conversion become attractive if the cost for doing the conversion are lower than the sale revenue for the product.

<u>total cost: raw materials + conversion cost</u>

corn price:           $  3.75

conversion cost:  $  1.60

Total cost:            $  5.35

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3 gallons of ethanol per bushel

total cost / output = 5.35/3 = 1.783 cost per gallon

5 0
4 years ago
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