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
postnew [5]
3 years ago
15

Spartans has 6.5 percent bonds outstanding that mature in 18 years. The bonds pay interest semiannually and have a face value of

$1,000. Currently, the bonds are selling for $985 each. What is the firm's pretax cost of debt
Business
1 answer:
sesenic [268]3 years ago
8 0

Answer:

The answer is 6.64%

Explanation:

The coupon payment is semiannual, meaning it is being paid twice a year.

N(Number of years/Number of periods) = 36(18 years x 2)

I/Y(Yield-To-Maturity) = ?

PMT(coupon payment) = $32.5 [(6.5%/2) x $1,000]

FV(Future value/Par value) =$1,000

PV(present value or market value) = $985

Now to solve this, lets use a financial calculator (e.g Texas BA II plus)

N= 36; PV = -985; PMT = $32.5; FV = $1,000; CPT I/Y = 3.32%

3.32% is for semiannual. Therefore annual pretax cost of debt is 6.64%

You might be interested in
According to the network model proposed by collins and quillian, common characteristics that different breeds of dogs share (e.g
Nataly_w [17]
The answer is non-redundancy. In addition, redundancy is a system design in which a constituent is replicated so if it fails there will be a holdup. The redundancy has a negative implication when the repetition is pointless or is simply the outcome of poor preparation.
7 0
2 years ago
A limited liability company (LLC) will be taxed as a corporation unless it elects to be taxed as a partnership. True False
hichkok12 [17]

Answer:

True

Explanation:

A LLC is a company that has its own identity and is taxed separated from all owners and investors.

6 0
2 years ago
Tutoring concerns. wally and sally want to go into business together and plan on offering a tutoring service to high school and
Lubov Fominskaja [6]
The type of business that Wally is proposing in the scenario above is partnership. There are three different type of partnership,they are: limited partnership, limited liability partnership and general partnership. Each of these three types provides partners with different level of liability. Thus, Wally was wrong when he said that there could be no personal liability for debts.  
6 0
3 years ago
In economic analysis, the value of your next best option is the
gayaneshka [121]
The value of  the best choice is called ' Opportunity Cost' in economics.
7 0
3 years ago
We cannot provide any information about your refund. be sure to: verify your filing date; check with your tax preparer if you fi
stira [4]
Verify your filing date...
5 0
3 years ago
Other questions:
  • Alpha Industries is considering a project with an initial cost of $8 million. The project will produce cash inflows of $1.49 mil
    9·1 answer
  •  Which of the following is least likely to be a safety concern in the shop? 
    9·1 answer
  • A dam is being built that will cost $500,000. The dam will cost $20,000 per year to operate and will require a maintenance expen
    12·1 answer
  • Betty is a consultant and operates a sole proprietorship providing advisory services. In July of 2019, Betty traveled from Minne
    12·1 answer
  • Another way the crash weakened the banks was that many banks themselves had taken depositor's money and invested it in the _____
    14·1 answer
  • Mike contracted with Kram Company, Mike's controlled corporation. Mike was a medical doctor and the contract provided that he wo
    10·1 answer
  • Writers at giant robot magazine realize that creating a​ ________ is important because it gives them the opportunity to let thei
    9·1 answer
  • Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described b
    10·1 answer
  • Codes of ethics and statements of core values:A. are the single most effective measure of enforcing ethical behavior and cultura
    9·1 answer
  • A normal cost system applies overhead to jobs ________.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!