finance

posted by .

. Fargo Industries has outstanding 30 year bonds at 7% semiannual payments. The bond sells at 90% of its face value. If their tax rate is 22%:
a.What is the aftertax cost of debt?
b. What is the pretax cost of debt?
c. Which is more important in calculating the cost of capital for Fargo, a or b?

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Finance

    Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $50, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face …
  2. Finance

    Filer Manufacturing has 11.6 million shares of common stock outstanding. The current share price is $50, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. The first bond issue has a face …
  3. Corporate Finance

    Calculating Cost of Debt. Peyton's Colt Farm issued a 30-year, 7% semiannual bond 7 years ago. The bond currently sells for 94% of its face value. The company's tax rate is 35%. What is the pretax cost of debt?
  4. finance

    What is ICU’s pretax cost of debt? What is ICU’s pretax cost of debt?
  5. finance

    Peyton’s Colt Farm issued a 30-year, 9.6 percent semiannual bond 6 years ago. The bond currently sells for 87.5 percent of its face value. The company’s tax rate is 38 percent. What is the pretax cost of debt?
  6. Finance

    You know that the after-tax cost of debt capital for Bubbles Champagne is 4.1 percent. Assume that the firm has only one issue of five-year bonds outstanding. The bonds make semiannual coupon payments and the marginal tax rate is 30 …
  7. Finance

    Jiminy's Cricket Farm issued a 30-year, 7.2 percent semiannual bond 6 years ago. The bond currently sells for 87.5 percent of its face value. The book value of this debt issue is $103 million. In addition, the company has a second …
  8. Finance

    Homework Help: Finance Posted by Sally on Monday, November 23, 2015 at 8:02pm. The answer given by Finance - Anonymous , Monday, November 23, 2015 at 8:12pm Add the tax to the "before tax" to get the answer was not helpful. I am hoping …
  9. managerial finance

    Completed all answers except the last one and I am stuck. Can someone please show me how to solve?
  10. finance

    Jiminy's Cricket Farm issued a 30-year, 7.2 percent semiannual bond 9 years ago. The bond currently sells for 85.5 percent of its face value. The book value of this debt issue is $107 million. In addition, the company has a second …

More Similar Questions