Corporate Finance

posted by .

Based on the current fianancial statements total liabilitie are 8 million and interest expensed for the coming year is 1 million. What is the cost of debt?

Assuming "liabilities" are all debt, which is usually the case, then
(1 million interest)/(8 million debt)= 12.5%

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. corporate finance

    Life Balance, Inc. has found that its cost of common equity capital is 15 percent and its cost of debt capital is 9 percent. If the firm is financed with $6 million of common shares (market value) and $4 million of debt, what is the …
  2. Corporate Finance

    A project cost $1 million and has a base-case NPV of exactly zero (NPV = 0). What is the projects' APV in the following cases?
  3. Finance

    Suppose a new company decides to raise a total of $200 million, with $100 million as common equity and $100 million as long-term debt. The debt can be mortgage bonds or debentures, but by an iron-clad provision in its charter, the …
  4. finance

    Faulkner's Fine Fries, Inc. (FFF), is thinking about reducing its debt burden. Given the following capital structure information and an expected EBIT of $50 million (plus or minus 10 percent) next year, should FFF change their capital …
  5. Finance

    AQ&Q has EBIT of $2 million, total assets of $10 million, stockholders' equity of $4 million, and pretax interest expense of 10 percent. A. What is AQ&Q's indifference level of EBIT?
  6. Corporate Finance

    A firm has a long-term debt-equity ratio of 0.5. Shareholders’ equity is $1.07 million. Current assets are $256,500, and the current ratio is 1.9. The only current liabilities are notes payable. What is the total debt ratio?
  7. Principles of finance

    Faulkner’s Fine Fries Inc (FFF) is thinking about reducing its debt burden. Given the following capital structure information and an expected EBIT of $50 Million (plus or minus 10%) next year, should FFF change their capital structure?
  8. Finance

    AQ&Q has EBIT of $2 million, total assets of $10 million, stock holder’s equity of $4 million, and pretax interest expense of 10 percent. a) What is AQ&Q’s indifference level of EBIT?
  9. Corporate Finance

    Avicorp has a $14.3 million debt issue outstanding with a 6.1% coupon rate. The debt has semi-annual coupons. The next coupon is due in six months and the debt matures in five years it is currently priced at 95% of par value a) What …
  10. Corporate Finance

    Avicorp has a $14.3 million debt issue outstanding with a 6.1% coupon rate. The debt has semi-annual coupons. The next coupon is due in six months and the debt matures in five years it is currently priced at 95% of par value a) What …

More Similar Questions