Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. (cost of debt?) carraway seed company is issuing a

(Cost of debt?) Carraway Seed Company is issuing a ?$1000 par value bond that pays 11...

80.2K

Verified Solution

Question

Finance

(Cost of debt?) Carraway Seed Company is issuing a ?$1000 parvalue bond that pays 11 percent annual interest and matures in 12years. Investors are willing to pay ?$945 for the bond. Flotationcosts will be 11 percent of market value. The company is in a 20percent tax bracket. What will be the? firm's after-tax cost ofdebt on the? bond?

Answer & Explanation Solved by verified expert
3.8 Ratings (453 Votes)
Information providedPar value 1000Time 12 yearsCoupon rate 11Coupon payment 0111000 110Current price present value 945Flotation cost    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

(Cost of debt?) Carraway Seed Company is issuing a ?$1000 parvalue bond that pays 11 percent annual interest and matures in 12years. Investors are willing to pay ?$945 for the bond. Flotationcosts will be 11 percent of market value. The company is in a 20percent tax bracket. What will be the? firm's after-tax cost ofdebt on the? bond?

Other questions asked by students

Q

What does it mean to say that counselling is a process?(write atleast 500 words)

Psychology
Q

Design and implementation of 4 bit ALU (74181) using behavioral style of modeling

Electrical Engineering
Q

How do businesses use value chains to discover opportunities?

General Management
Q

a. Analyze the following Graph and the breakeven point and discuss how this analysis is used...

Accounting
Q

th 3 2Bw A semicircular loop of radius R is rotated with an angular velocity...

Physics
Q

34 A thermoflask made of stainless steel contains serveral tiny lead shots If flask is...

Physics
Q

Question 3 25 points A cone is shown with the following measures A radius of...

Geometry
Q

Lighthouse Master Olivia is atop her 300 ft lighthouse and spots a boat in the...

Basic Math
Q

Suppose both f and f- are differentiable functions such that f(5) = 3913Determine (f) (3).(-)...

Calculus
Q

INSIDE, una empresa de decoracin de interiores, utiliza un sistema de costeo por rdenes de...

Accounting
Q

If 27,000 units are produced, what are the total amounts of direct and indirect manufacturing...

Accounting
Q

Exercise 3-18 (Static) Record closing entries and prepare a post-closing trial balance (LO3-6, 3-7) Laker...

Accounting