finance

posted by .

Suppose a zero-coupon bond is selling for $614.00 today. It promises to pay $1,000 in exactly 10 years with annual compounding. What is the firm’s after-tax cost of debt if this is its sole debt outstanding (assuming the firm is in the 20% tax bracket)?

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Finance

    Hi Tech Products has 35,000 bonds outstanding that are currently quoted at 102.3. The bonds mature in 11 years and carry a 9 percent annual coupon. What is the firm's aftertax cost of debt if the applicable tax rate is 35 percent?
  2. Finance

    1. Firm L has debt with a market value of $200,000 and a yield of 9%. The firm's equity has a market value of $300,000, its earnings are growing at a rate of 5%, and its tax rate is 40%. A similar firm with no debt has a cost of equity …
  3. Finance

    A firm with 50% debt to equity ratio has a cost of equity capital of 15%, a cost of debt of 9% and a tax rate of 33%. The firm is considering a project costing 5,000 that will generate an annual cash flow of 1,000 for the next 8 years. …
  4. finance

    if tiny tots has a outstanding debt currently selling for 800 per bond. it matures in 20 years pays interest annually and has 14% coupon rate par is 1,000, what is the after tax cost of the debt?
  5. 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 …
  6. 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 …
  7. BUS 401

    Suppose a zero-coupon bond is selling for $614.00 today. It promises to pay $1,000 in exactly 10 years with annual compounding. Its annual rate of return would be about
  8. finance

    1. A bond pays semiannual coupon payments of $30 each. It matures in 20 years and is selling for $1,200. What is the firm’s cost of debt if the bond’s par value is $1,000?
  9. Finance

    1. A bond pays semiannual coupon payments of $30 each. It matures in 20 years and is selling for $1,200. What is the firm’s cost of debt if the bond’s par value is $1,000?
  10. Finance

    Olympic Sports has two issues of debt outstanding. One is a 6% coupon bond with a face value of $35 million, a maturity of 10 years, and a yield to maturity of 7%. The coupons are paid annually. The other bond issue has a maturity …

More Similar Questions