Flotation costs and Currently, warren industhet sell 10-year, 1,000-par-value bonds paying annual interest at a 12% coupon rate. Because current market rates for similar bonds are just under 12%, Warren can sell its bonds for $970 each; Warren will incur flotation costs of $20 per bond. The firm is in the 24% tax bracket. a. Find the net proceeds from the sale of the bond, Nd-

Flotation costs and Currently, warren industhet sell 10-year, 1,000-par-value bonds paying annual interest at a 12% coupon rate. Because current market rates for similar bonds are just under 12%, Warren can sell its bonds for $970 each; Warren will incur flotation costs of $20 per bond. The firm is in the 24% tax bracket. a. Find the net proceeds from the sale of the bond, Nd-

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 14P

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Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 11% coupon rate. Because current market rates for similar bonds are just under 11%, Warren can sell its bonds for $1,010 each; Warren will incur flotation costs of $35 per bond. The firm is in the 25% tax bracket. a. Find the net proceeds from the sale of the bond, No- b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. C a. The net proceeds from the sale of the bond, N, is $. (Round to the nearest dollar.)
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Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 11% coupon rate. Because current market rates for similar bonds are just under 11%, Warren can sell its bonds for $980 each; Warren will incur flotation costs of $20 per bond. The firm is in the 26% tax bracket. a. Find the net proceeds from the sale of the bond, Nd. b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. a. The net proceeds from the sale of the bond, Nd, is $ (Round to the nearest dollar.)
Current Attempt in Progress You know that the after-tax cost of debt capital for Wildhorse Company is 18.9 percent. If the firm has only one issue of five-year bonds outstanding. Assume the bonds make semiannual coupon payments and the marginal tax rate is 30 percent. Assume the par value of the bonds is $1,000. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Problem 13.15 a1-a2 (Excel Video)(a1) Calculate the pre-tax cost of debt capital. Pre-tax cost of debt capital %
Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 20-year, $1,000-par-value bonds paying annual interest at a 9% coupon rate. Because current market rates for similar bonds are just under 9%, Warren can sell its bonds for $1,020 each; Warren will incur flotation costs of $25 per bond. The firm is in the 27% tax bracket. a. Find the net proceeds from the sale of the bond, Ng. b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. a. The net proceeds from the sale of the bond, Na, is $ (Round to the nearest dollar.) ext a Librai Calculat Resource Enter your answer in the answer box and then click Check Answer. Check Answer = Study Clear All parts remaining unication Tools > This course (Introduction to Finance (FIN-101-D02) Distance Spring 2021) is hased on Zutter/Smart: Princinles of Managerial…
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Currently, Warren Industries can sell 20-year, $1,000-par-valuebonds paying annual interest at a 14% coupon rate. Because current market rates for similar bonds are just under 14%, Warren can sell its bonds for $960 each; Warren will incur flotation costs of $35 per bond. The firm is in the 22%tax bracket. a. Find the net proceeds from the sale of the bond, Nd. b. Calculate the before-tax and after-tax costs of debt.
Cost of debt using both methods (YTM and the approximation formula) Currently, Warren Industries can sell 10-year, $1,000-par-value bonds paying annual interest at a 8% coupon rate. Because current market rates for similar bonds are just under 8%, Warren can sell its bonds for $990 each; Warren will incur flotation costs of $30 per bond. The firm is in the 27% tax bracket. a. Find the net proceeds from the sale of the bond, No- b. Calculate the bond's yield to maturity (YTM) to estimate the before-tax and after-tax costs of debt. c. Use the approximation formula to estimate the before-tax and after-tax costs of debt. a. The net proceeds from the sale of the bond, No, is $. (Round to the nearest dollar.) (...)
The firm can raise an unlimited amount of debt by selling R1,000 par value, 8% coupon interest rate, 20 year bonds on which annual interest payments will be made. To sell the issue, an average discount of R50 per bond would have to be given. The firm also must pay flotation costs of R50 per bond. Firm is in 40% tax bracket. Determine after tax cost of debt. A. 5.86% B. 5.48% C. 5.46% D. 5.55%
Current Attempt in Progress You know that the after-tax cost of debt capital for Oriole Company is 15.4 percent. If the firm has only one issue of five-year bonds outstanding. Assume the bonds make semiannual coupon payments and the marginal tax rate is 30 percent. Assume the par value of the bonds is $1,000. Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you've been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Problem 13.15 a1-a2 (Excel Video)(a1) Calculate the pre-tax cost of debt capital. Pre-tax cost of debt capital
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Suppose that LilyMac Photography expects EBIT to be approximately $230,000 per year for the foreseeable future, and that it has 1,000 10-year, 9 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate 37 %