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
riadik2000 [5.3K]
2 years ago
11

issues new bonds to fund an acquisition. The face value of the bond is $100 and annual coupon is 6.5%. Further, this bond mature

s in 20 years and is issued at a price of $105. Assuming KJ Pharma's tax rate is 30%, what is its After-Tax Cost of Debt
Business
1 answer:
grandymaker [24]2 years ago
7 0

Answer:

KJ Pharma Corporation

KJ Pharma's after-tax cost of debt is:

= 4.55%.

Explanation:

a) Data and Calculations:

Face value of the bond = $100

Annual coupon rate (cost of debt) = 6.5%

Maturity period of bond = 20 years

Tax rate = 30%

After-Tax Cost of Debt = 6.5 (1 - 0.3)

= 4.55%

b) KJ Pharma's after-tax cost of debt is the interest paid on the bond less any income tax savings accounted for as deductible interest expenses. To calculate the after-tax cost of debt, KJ subtracts the company's effective tax rate from 1 and multiplies the difference by its cost of debt.

You might be interested in
Austin and Erin are willing to pay $10 and $9, respectively, for a ticket to a screening of a new movie. What is the total consu
Rina8888 [55]

Answer:

B) $7

Explanation:

The computation of the consumer surplus is shown below:

Consumer surplus = Willing to pay - Market price

For Austin, The consumer surplus = $10 - $6 = $4

For Erin, The consumer surplus = $9 - $6 = $3

So, the total consumer surplus = $4 + $3 = $7

Simply we deduct the market price from the willing to pay so that the consumer surplus can be computed

8 0
3 years ago
In the short-run, if there is a surplus in the market for a product, the rationing function of price can be expected to cause:
Diano4ka-milaya [45]

Option D

In the short-run, if there is a surplus in the market for a product, the rationing function of price can be expected to cause:  a decrease in the market price of the product.

<h3><u>Explanation:</u></h3>

When quantity provided surpasses quantity required, a surplus endures.  If the value goes up, the amount of necessitated goes downward. If the price drops, the quantity required raises. Price ceilings limit a price from growing beyond a particular level.

When a price ceiling is fixed under the equilibrium price, the amount required will pass quantity fulfilled, and excess demand or deficits will result. Price floors block a price from dropping below a reliable level. When a price floor is fixed beyond the equilibrium price, the measure supplied will exceed the quantity needed, and excess stock or surpluses will happen.

5 0
3 years ago
Bledsoe Company received $15,000 cash from the issue of stock on January 1, 2013. During 2013 Bledsoe earned $8,500 of revenue o
kati45 [8]

Answer:

Total assets is increased by $18,100

Explanation:

The computation is shown below:

= Cash received from the issue of stock + revenue earned on account - cash paid for operating expenses

= $15,000 + $8,500 - $5,400

= $18,400

This positive amount shows that there is an increase in the total assets for $18,100

The cash collected from the account receivable is not relevant. Hence ignored it

5 0
2 years ago
One advantage of a fixed interest rate over a variable rate is that a fixed rate
koban [17]

Fixed rates have the advantage over variable rates in that debt may be readily repaid within the allotted time. Hence, choice B

<h3>What is a fixed and variable rate?</h3>

Loans with fixed interest rates have an interest rate that will not change throughout the loan's term, regardless of changes in market interest rates. A loan with a variable interest rate is one in which the interest rate imposed on the outstanding balance changes in accordance with changes in the market interest rates.

Therefore, the benefit of fixed rate versus variable rate is that it enables speedier debt repayment.

Learn more about interest rates:

brainly.com/question/14445709

#SPJ1

6 0
2 years ago
EA3.
icang [17]

Answer:

3,000 units and 1,950 units

Explanation:

For computing the equivalent units of ending work in process for materials and conversion cost, first we have to determine the ending work in process units which is shown below:

Ending work in process units = Beginning inventory + units started - units completed and transferred

= 2,500 units + 18,000 units - 17,500 units

= 3,000 units

Now the equivalent units of ending work in process for materials would be

= 3,000 units × 100%

= 3,000 units

And, for conversion cost it would be

= 3,000 units × 65%

= 1,950 units

3 0
3 years ago
Other questions:
  • Ritchie Manufacturing Company makes a product that it sells for $150 per unit. The company incurs variable manufacturing costs o
    12·1 answer
  • What is the name of the food production strategy, which is characterized by "slash and burn, swidden agricultural techniques use
    11·1 answer
  • Self-interest helps achieve society's economic goals because as consumers and producers exercise their ____ to act in their own
    11·1 answer
  • Differentiate among the following.
    14·1 answer
  • Arkensland is a highly industrialized countr. Prices have been steadily increasing over the last few years and inflation reached
    12·1 answer
  • Banks fail when the value of bank ________ falls below the value of ________, causing the bank to become insolvent.
    15·1 answer
  • Program trading is defined as automated trading generated by computer algorithms designed to react rapidly to changes in market
    12·1 answer
  • Mario is a skilled jet flyer that was recently hired by Meagan who is starting an airline business that allows travelers to trav
    9·1 answer
  • Select the examples of Energy workplaces. mines, power plants, refineries, schools, trains, warehouses, stores, offices.
    9·2 answers
  • The relationship between the elasticity of product demand and the elasticity of demand for labor employed in its production is s
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!