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Author Question: Pan American Airlines' shares are currently trading at $69.25 each. The yield on Pan Am's debt is 4% ... (Read 134 times)

sheilaspns

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on: Apr 25, 2021

Question 1

Katie's Boutique has zero-coupon bonds outstanding that mature in four years. The bonds have a face value of $1,000 and a current market price of $820. What is the company's pre-tax cost of debt?
◦ 5.01 percent
◦ 5.09 percent
◦ 5.18 percent
◦ 5.36 percent
◦ 5.49 percent

Question 2

Pan American Airlines' shares are currently trading at $69.25 each. The yield on Pan Am's debt is 4% and the firm's beta is 0.7. The T-Bill rate is 4% and the expected return on the market (E (kM)) is 9%. The company's target capital structure is 25% debt and 75% equity. Pan American Airlines pays a combined federal and state tax rate of 35%. What is Pan Am's cost of debt (after tax)?
◦ 2.6%
◦ 3.0%
◦ 3.3%
◦ 3.5%
◦ 4.0%
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by sheilaspns on Apr 25, 2021

peilian

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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sheilaspns

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Reply 2 on: Apr 25, 2021
YES! Correct, THANKS for helping me on my review

parker125

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Reply 3 on: Yesterday
Excellent

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