Question

Question seckham Corporation has semiannual bonds must bonds outstanding with 20 vears to maturity and the bond 746.16. If the bonds have a coupon rate of 8.5 percent, then what is the after-tax cost of arginal tax rate is 35%7 Round your intermediate calculation to two decimal places ar three decimal places. rity and the bonds are currently priced at after-tax cost of debt for Beckham if its con to two decimal places and final percentage answer to A. 8.236% B. 8.491% C. 7.696% D. 7.953% *Question Droz's Hiking Gear, Inc. has found that its common equity capital shares have a beta equal to 22 return is 8 percent and the expected return on the market is 14 percent. It has 7-year semiannual year semiannual maturity bonds outstanding with a price of $1,050 that have a coupon rate of 7 percent. The firm is financed with coupon rate of 7 percent. The firm is financed with $120 million of common shares market value) and $80 million of deht What is the after-tax weighted average os the after-tax weighted average cost of capital for Droz's, if it is subject to a 35 percent marginal tax rate? Round your final percentage answer to three deca A. 14.952% B. 13.371% C. 12.266% D. 15.389% *Question Your mother is trying to choose one of the following bank CDs to deposit $10,000. Which one will have the highest future value if he plans to invest for five years? A. 5.62% compounded annually B. 5.50% compounded daily C. 5.52% compounded monthly D. 5.56% compounded semi-annually *Question Jane has been offered a 15-year bond issued by Barone, Inc., at a price of $943.22. The bond has a coupon rate of percent and pays the coupon semiannually. Bond has a face value of $1,000. Similar bonds in the man e value of $1,000. Similar bonds in the market will yield 10 percent today. What are the cash flows from this bond? A. $90 coupon payment annually and 943.22 at maturity B. $45 coupon payment semi-annually and 943.22 at maturity C. $50 coupon payment annually and $1000 at maturity D. $45 coupon payment semi-annually and $1000 at maturity

Answer 1

1) Pmt 20*2 1000*0.085*1/2 $ Nper Nper Pmt Pv Fv $ 42.50 (746.16) 1,000.00 payment Number of periods Presnt value Face value $ Rate RATE(nper,pmt,pv, fv) RATE(40,42.50,-746.16, 1000) 5.92% Pretax Cost of Debt 5.92%*2 Pretax Cost of Debt 11.84% After Tax Cost of Debt Pretax cost of debt*(1-Tax rate) 0.1184*(1-0.35) 0.076961319 7.696% Answer:C