The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 5 percent each…show more content… Selected Answer:
18.29
Correct Answer:
18.29 ± 0.5%
Response Feedback:
MV of Common Stock = common shares outstanding * share price
MV of Preferred Stock = preferred shares outstanding * share price
MV of Bonds = bonds outstanding * bond price
Weight of Preferred stock in capital structure = MV of Pref Stock/ (MV of Common Stock + MV of Pref Stock + MV of Bonds)
Question 11
1 out of 1 points
The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.
Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company’s tax rate is 40%. What is the after-tax cost of debt?
