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Arisa [49]
2 years ago
13

Joliet Company is planning to issue $1,000 par value bonds that have a coupon rate of 9.6%. The bonds will be sold at a market p

rice of $1,120. Flotation costs will amount to 4 percent of market value. The bonds would mature in 15 years and coupon payments would be semi-annual. Joliet's corporate tax rate is 35%. What is the firm's cost of debt financing
Business
1 answer:
11111nata11111 [884]2 years ago
4 0

Answer:

Pre-tax cost of debt is 8.7%

After-tax cost of debt is 5.66%

Explanation:

the cost of debt financing  before tax is the yield to maturity on the bond, which can be computed using the rate formula in excel.

=rate(nper,pmt,-pv,fv)

nper  is the number of times the bonds pay s interest which is 15*2=30

pmt is the semi-annual  interest of the bond:9.6%/2*$1000=$48

pv  is the current market price of $1,120 minus 4% flotation cost i.e 1120*96%=$1075.2

Fv is the face of the bond at $1000

=rate(30,48,-1075.2 ,1000)

rate=4.35% on semi-annual basis

rate  =4.35%*2=8.7% on annual basis

after tax cost of debt =8.7%*(1-0.35)

                                    =5.66%

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Suppose you and a classmate are playing a game where your classmate proposes a division of​ $1.00. ​ Then, you either accept or
pochemuha

Answer: The correct answers are "A. Accept" and "$ 0.01".

Explanation: Given that we talk about optimal strategy when maximizing the expected profit by the player:

In the first case It is convenient to accept the proposal and keep $ 0.12, instead of rejecting it and running out of nothing.

And in the second case it is convenient to give the classmate as little as possible so that he accepts and we have a greater profit.

4 0
2 years ago
A common problem in surveying is to determine the altitudes of a series of points with respect to some reference point. The meas
iVinArrow [24]

<u>Answer:</u>

<em>During</em><em> light downpour or day off,</em><em> teams can work; be that as it may, at whatever point the downpour or snow is </em><em>influencing perceivability</em><em> or there is lightning, a field group ought not be working. </em>

<u>Explanation:</u>

A <em>common problem in surveying</em> is to determine the altitudes of a series of points with respect to some reference point.

The <em>measurements are subject to error</em>, so more observations are taken than are strictly necessary to determine the altitudes, and the resulting over determined system is solved in the <em>least-squares sense to smooth out errors. </em>

5 0
2 years ago
A On December 31, 2017, State Construction Inc. signs a contract with the state of West Virginia Department of Transportation to
larisa [96]

Answer:

2018: $78 million

2019: $468 million

2020: $234 million

Explanation:

Given that State Construction incurred costs as follows:

Year                         Cost

2018                         $60 million

2019                         $360 million

2020                        $180 million

Total cost = $60 million + $360 million + $180 million = $600 million

Percentage to total cost ratio is:

For 2018 = $60 million / $600 million = 0.1,

For 2019 = $360 million / $600 million = 0.6,

For 2020 = $180 million / $600 million = 0.3.

Revenue = Percentage to total cost ratio × Contract price.

Contract price = $780 million

For 2018, Revenue = 0.1 × $780 million = $78 million

For 2019, Revenue = 0.6 × $780 million = $468 million

For 2020, Revenue = 0.3 × $780 million = $234 million

3 0
2 years ago
Common stock is a vehicle for selling ownership and another way to raise money for​ operations, expansion, or other business nee
ale4655 [162]

The statement, "Common stock is a vehicle for selling ownership and another way to raise money for​ operations, expansion, or other business needs" is true.

<u>Explanation:</u>

Common stock is a distribution tool and a way to raise capital for investment, business growth or other company needs.

Common stock is a kind of  company holding, a type of safety. In many other regions of the world, the terms polling share and prevalent share are frequently were using.

The "common stock" is used mainly in the USA. These are classified as shareholdings or common shares in the United Kingdom and other Commonwealth.

It means that one common stock share constitutes percentage equity of a corporation. In certain words, this is a way to split the assets of a corporation.

For example, if 100 shares were taken out, one share would amount to one percent of the company's intellectual property.

6 0
2 years ago
Lower of Cost or Market The accountant for Murphy Company prepared the following analysis of its inventory at year end: Item Uni
Nina [5.8K]

Answer:

  $52,860

Explanation:

The computation of the ending inventory using the  lower of cost or market method is shown below:

Product                    Cost           Net realizable value Lower of cost or NRV

RSK-89013 600 × $38 = $22,800 600 × $47 = $28,800   $22,800

LKW-91247 420 × $47 = $19,740     420 × $40 = $16,800        $16,800

QEC-57429  510 × $26 = $13,260    510 × $32 = $16,320         $13,260

Carrying value of the ending inventory is                                       $52,860

7 0
1 year ago
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