« previous next »

Author Question: A corporate bond has a face value of 1,000 and a coupon rate of 9. The bond matures in 14 years and ... (Read 134 times)

mrsjacobs44

  • Hero Member
  • *****
  • Posts: 500
on: Jul 10, 2018
A corporate bond has a face value of 1,000 and a coupon rate of 9. The bond matures in 14 years
  and has a current market price of 946. If the corporation sells more bonds, it will incur flotation
  costs of 26 per bond.
 
  If the corporate tax rate is 35, what is the after-tax cost of debt capital?
  A) 6.56 B) 5.57 C) 8.18 D) 7.31

Question 2

According to the residual theory of dividends,
 
  A) dividend payments are a constant percentage of earnings per share.
  B) a dividend is the residual above the payout ratio.
  C) dividends are a residual after investment financing needs have been met.
  D) earnings remaining after payment of preferred stock dividends should be paid to common
  stockholders.
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
Buy Test-Bank


wilsonbho

  • Sr. Member
  • ****
  • Posts: 322
Reply #1 on: Jul 10, 2018
Answer to Question 1

A

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

Every flu season is different, and even healthy people can get extremely sick from the flu, as well as spread it to others. The flu season can begin as early as October and last as late as May. Every person over six months of age should get an annual flu vaccine. The vaccine cannot cause you to get influenza, but in some seasons, may not be completely able to prevent you from acquiring influenza due to changes in causative viruses. The viruses in the flu shot are killed—there is no way they can give you the flu. Minor side effects include soreness, redness, or swelling where the shot was given. It is possible to develop a slight fever, and body aches, but these are simply signs that the body is responding to the vaccine and making itself ready to fight off the influenza virus should you come in contact with it.

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Did you know?

Bacteria have been found alive in a lake buried one half mile under ice in Antarctica.

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

Cranial capacity has increased approximately fourfold over the last 3.5 million years of hominin evo Cranial capacity has increased approximately fourfold over the last 3.5 million years of hominin evo
Women who reported one, two, or three or more major life events in the past 5 years were ... Women who reported one, two, or three or more major life events in the past 5 years were ...
How long does it take for 90% of a sample of strontium-90 (half-life of 28.8 years) to decay? How long does it take for 90% of a sample of strontium-90 (half-life of 28.8 years) to decay?
Apply effleurage to the face using palms. Stroke bilaterally from chin to temples, lifting facial ... Apply effleurage to the face using palms. Stroke bilaterally from chin to temples, lifting facial ...
Saving Rate by Decile of Income per Capita Saving Rate by Decile of Income per Capita
A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August ... A $50 000 bond bearing interest at 5.5% payable semi-annually is redeemable at par on August ...
Video: Supine Position

For a complete list of videos, visit our video library