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
If a company wanted to finance the purchase of equipment without diluting shareholders equity, which of the following operation
Jobisdone [24]

Answer:

Issuing convertible bonds

Explanation:

Convertible bonds are corporate bonds that can be exchanged for common stock in the issuing company. Companies issue convertible bonds to lower the coupon rate on debt and to delay dilution. A bond's conversion ratio determines how many shares an investor will get for it.

5 0
2 years ago
"Bishop, Inc., is obligated to pay its creditors $6,500 during the year. (Leave no cells blank - be certain to enter "0" whereve
RSB [31]

Answer:

Explanation:

It is given that there is a liability to creditors of 6,500

Total assets = Total liability + Shareholder's equity

a) Shareholder's equity = Total assets - Total liability = 10,250 - 6,500 = 3,750

b) Shareholder's equity = Total assets - Total liability = 5,900 - 6,500 = -600

4 0
3 years ago
In conducting their research, economists often substitute historical events and historical episodes for
podryga [215]

Answer:

b. laboratory experiments.

Explanation:

Laboratory experiments -

It refers to the practice of an experiment in a appropriate and controlled condition , is referred to as the laboratory experiments .

In this case , the experiment involve some standard conditions , which are necessary for the experiment to occur  .

Hence , from the given information of the question,

The correct option is laboratory experiments.

8 0
3 years ago
The story of Clarence Saunders is both inspirational and a cautionary tale. What did he do
777dan777 [17]

Answer

Clarence Saunders invented self-service shopping, when he opened a grocery store in Memphis, Tennessee on 6 September 1916, under the whimsical name Piggly Wiggly.

Explanation:

3 0
1 year ago
The Statement of Net Position of South State University, a government-owned university, as of the end of its fiscal year June 30
alexandr402 [8]

Answer:

Explanation:

Base on the scenario been described in this question, we can use the following method to be solve the question below using Microsoft word we have the solution in the image attached file below

5 0
3 years ago
Other questions:
  • In general, managing global operations is made easier by __________ and __________.
    10·1 answer
  • Why would legislation most likely ask interest groups to help shape public policy?
    14·1 answer
  • As economies advance, a growing proportion of the economy's activities focuses on the production of ________. A) products B) eve
    5·1 answer
  • Sales revenues are usually considered earned when an order is received. cash is received from credit sales. adjusting entries ar
    12·1 answer
  • The degree of agreement among several measurements of the same quantity is called ________________. It reflects the reproducibil
    6·1 answer
  • Suppose income increases by 25 percent​ and, as a​ result, the quantity of a particular brand of automobile demanded​ (holding t
    6·1 answer
  • A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest (compounded yearly). The firm will make no payments
    11·1 answer
  • Vaughn’s Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $1270
    7·1 answer
  • What example best describes the market structure of monopolistic
    11·1 answer
  • The role of the entrepreneur in society is to bring the factors of production together and take the risks of producing output. r
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!