At the present time, Andalusian Limited (AL) has 15-year noncallable bonds with a face value of $1,000 that are outstanding. The
se bonds have a current market price of $1,329.55 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus-state tax rate of 25%. If AL wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YTM rate to two decimal place.)A. 6.09%B. 4.87%C.5.48%D. 7.31%
1 answer:
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Answer:
Following are the solution to this question:
Explanation:
In point 1:
Date Title post reference Dr. Cr. 30-sep Method work – refining 141 388000
Materials 131 385000
In point 2:
Date Title post reference Dr. Cr. 30-sep Method work – refining 141 141000
Payable Wages 251 141000
In point 3:
Date Title post reference Dr. Cr. 30-sep Method work – refining 141 96800
Factory overhead- refining 151 96800
In part B:
Date Title post reference Dr. Cr. 30-sep Method work – Sifting 142 625600
Method work – refining 141 625600