Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ying import has several bond issues outstanding, e

Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...

60.1K

Verified Solution

Question

Finance

Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable.

BondCoupon RatePrice QuoteMaturity  Face Value
15.9%105.665years$51,000,000
27.5114.428years46,000,000
37.4112.9715.5years66,000,000
46.7102.2125years73,000,000

If the corporate tax rate is 21 percent, what is the aftertaxcost of the company’s debt?

Answer & Explanation Solved by verified expert
4.4 Ratings (572 Votes)
Solution Aftertax cost of the companys debt 453 Working Notes Calculation of market value of debt and its weight in the total debt QuoteFace value per bond x total face value Market value total market value 255693300 Bond Price Quote Face value Market value Weight 1 10566 51000000 53886600 0210747016 10566100 x 51000000 53886600255693300 2 11442 46000000 52633200 020584505 3 11297 66000000 74560200 0291600132 4 10221 73000000 74613300 0291807803 Total 255693300 1 Since these bond are paying semi annual coupon means twice a year Its YTM can be exactly calculated by financial calculator or excel method here we use excel    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

Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable.BondCoupon RatePrice QuoteMaturity  Face Value15.9%105.665years$51,000,00027.5114.428years46,000,00037.4112.9715.5years66,000,00046.7102.2125years73,000,000If the corporate tax rate is 21 percent, what is the aftertaxcost of the company’s debt?

Other questions asked by students

Q

Certified Behavior Analysts claim that their procedures are more effective than any other. Their procedures are...

Statistics
Q

1- What are the advantages and disadvantages for using doughnut chart? 2- What type of insights can...

Statistics
Q

How do oxygen, temperature, pH, and water determine where you might find a specific species of...

Biology
Q

Read about the Germ Plasm theory. Propose any experiment that would act as a proof or...

Biology
Q

A seismic instrument (a mass connected to a spring and a damper) is employed to record...

Mechanical Engineering
Q

You are setting up a corporate flight department for an oil exploration company that will be...

General Management
Q

14. Under IFRS, equity is described as each of the following except a. retained equity. b. shareholders’ funds. c....

Accounting
Q

Ehlo Company is a multiproduct firm. Presented below is information concerning one of...

Accounting
Q

On January 1, 2018, the Mason Manufacturing Company began construction of a building to be...

Accounting
Q

Indicate for each company two specific examples of possible fixed costs, two specific examples of...

Accounting
Q

REQUIRED Use the information given below to prepare the Income Statement of Costa Enterprises for...

Accounting
Q

Question 8 2 pts When interest is being capitalized as part of construction of an...

Accounting