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

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Finance

Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable. If the corporate tax rate is 32 percent, what is theaftertax cost of Ying's debt?

Bond

Coupon Rate

Price Quote

Maturity

Face Value

15.8%     107     7 years       $ 18,000,000   
27.1        116     11 years       38,000,000   
36.2        111     22 years       48,000,000   
47.4        122     36 years       62,000,000   

Multiple Choice

  • 3.9%

  • 3.53%

  • 3.56%

  • 5.46%

  • 3.71%

Answer & Explanation Solved by verified expert
4.0 Ratings (635 Votes)
Bond 1 Number of shares Face valuepar 18000000100018000 K Nx2 Bond Price Semi Annual Coupon1 YTM2k Par value1 YTM2Nx2 k1 K 7x2 1070 5810002001 YTM200k 10001 YTM2007x2 k1 YTM 462 Bond 2 Number of shares Face valuepar 38000000100038000 K Nx2 Bond Price Semi Annual Coupon1 YTM2k Par value1 YTM2Nx2 k1 K 11x2    See Answer
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Transcribed Image Text

Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable. If the corporate tax rate is 32 percent, what is theaftertax cost of Ying's debt?BondCoupon RatePrice QuoteMaturityFace Value15.8%     107     7 years       $ 18,000,000   27.1        116     11 years       38,000,000   36.2        111     22 years       48,000,000   47.4        122     36 years       62,000,000   Multiple Choice3.9%3.53%3.56%5.46%3.71%

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