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Fynjy0 [20]
3 years ago
6

Quantitative Problem: 5 years ago, Barton Industries issued 25-year noncallable, semiannual bonds with a $1,000 face value and a

n 8% coupon, semiannual payment ($40 payment every 6 months). The bonds currently sell for $847.87. If the firm's marginal tax rate is 25%, what is the firm's after-tax cost of debt
Business
1 answer:
posledela3 years ago
8 0

Answer:

After-tax cost of debt = 73.06%

Explanation:

Nper = 20*2 = 40

Pmt = 40

Pv = -847.87

Fv = 1000

Tax rate = 25%

<em>Firm's after-tax cost of debt is calculated as follow:</em>

After-tax cost of debt = RATE(Nper, Pmt, Pv, Fv) * (1-tax rate)

After-tax cost of debt = (RATE(20*2,40,-894.87,1000)*2)*(1-25%)

After-tax cost of debt =  (0.048709771*2) * 0.75

After-tax cost of debt = 0.097419542 * 0.75

After-tax cost of debt = 0.0730646565

After-tax cost of debt = 73.06%

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6 0
3 years ago
A machine whose cash ptice us $700 was bought on hire purchase for $784. The cost of credit was​
anastassius [24]

Answer:

$84

Explanation:

Cost of Credit refers to the expenses incurred when using credit. It is the cost of borrowing and is represented by the difference between the total amount paid back and the amount borrowed.

I.e., cost of credit = Amount paid - Amount borrowed.

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7 0
3 years ago
In a portfolio of three randomly selected stocks, which of the following could NOT be true; i.e., which statement is false? a. T
Serhud [2]

Answer:

c. The beta of the portfolio is lower than the lowest of the three betas.

Explanation:

As for any investment portfolio, with number of investments, each investment has its own beta.

When we compute the beta for entire portfolio, the beta is based on weighted average of investments.

Under the weighted average method there are weights assigned on the basis of value of individual investment, out of total value of investment.

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6 0
4 years ago
Preparing a Schedule of Cash Collections on Accounts Receivable
marysya [2.9K]

Answer:

                                Kailua and Company

                          Schedule of Cash Collections

                                                                    August           September

Cash collections from June                       $25,200                      $0

Cash collections from July                        $38,500             $19,250

Cash collections from August                    $17,220            $43,050

<u>Cash collections from September                      $0             $17,800  </u>

Total cash collections                               $80,920             $80,100

I suppose that 5% of the billings are uncollectible since 20% + 50% + 25% = 95%.

7 0
3 years ago
Business cycles ___________.
Amanda [17]

Answer:

Are ups and downs in the level of economic activity

Explanation:

Business cycles is defined as the various ups and downs in the economic activities of a particular nations. These ups and downs are generally measured by the fluctuations in the macro economic variables. These macro economic variables includes:

(i) Gross domestic product (GDP)

(ii) Employment

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There are four major phases in the process of business cycle are as follows:

(i) Expansion

(ii) Peak

(iii) Contraction

(iv) Trough

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4 years ago
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