Answer:
After cost of debt for a floatation cost of 2% is 6.62%
Explanation:
After tax cost of debt = Market interest × (1- tax rate)
We will get the cost of debt using the time value of money principle.
PV = -$1,000
Pmt = $1,000 × 9%
=$90
P/yr = 1
N = 20
FV =1,000
Tax rate = 25%
YTM
The market interest rate is 9% using financial calculator hence;
After-tax cost of debt = Market interest × (1-tax rate)
= 0.09 × (1 - 0.25)
= 0.0675 or 6.75%
If floatation cost is 2%, then
Net receipts after floatation cost = Cost × (1 - floatation rate)
= 0.0675 × (1- 0.02)
= 0.06615 or 6.62%
Answer:
Date Account Title Debit Credit
Dec 11, 2018 Interest receivable $20,600
Interest revenue $20,600
Explanation:
The interest receivable on December 31, 2018 would be based on the lease amount at the end of the year which will be the present value of the lease less the lease amount paid for the year:
Lease amount = 240,000 - 34,000
= $206,000
Interest receivable = 206,000 * 10%
= $20,600
<span>The late 1800's is known as the "production era" of marketing. It lasted from the 1860's to the 1920's, and entailed lowering costs of production, and therefore lower product costs for consumers as a result of the industrial revolution. Essentially, products were marketed by passing along the cost savings of mass production to consumers.</span>
