Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed...

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Finance

Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable. If the corporate tax rate is 32 percent, what is theaftertax cost of Ying's debt?
Bond
Coupon Rate
Price Quote
Maturity
Face Value
1 5.8%      107      7 years        $ 18,000,000
2 7.1         116      11 years        38,000,000
3 6.2         111      22 years        48,000,000
4 7.4         122      36 years        62,000,000
Multiple Choice
3.9%
3.53%
3.56%
5.46%
3.71%

Answer & Explanation Solved by verified expert

4.0 Ratings (635 Votes)

Bond 1 Number of shares Face valuepar 18000000100018000 K Nx2 Bond Price Semi Annual Coupon1 YTM2k Par value1 YTM2Nx2 k1 K 7x2 1070 5810002001 YTM200k 10001 YTM2007x2 k1 YTM 462 Bond 2 Number of shares Face valuepar 38000000100038000 K Nx2 Bond Price Semi Annual Coupon1 YTM2k Par value1 YTM2Nx2 k1 K 11x2 See Answer

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Transcribed Image Text

Ying Import has several bond issues outstanding, each makingsemiannual interest payments. The bonds are listed in the followingtable. If the corporate tax rate is 32 percent, what is theaftertax cost of Ying's debt?BondCoupon RatePrice QuoteMaturityFace Value15.8% 107 7 years $ 18,000,000 27.1 116 11 years 38,000,000 36.2 111 22 years 48,000,000 47.4 122 36 years 62,000,000 Multiple Choice3.9%3.53%3.56%5.46%3.71%

Bond	Coupon Rate	Price Quote	Maturity	Face Value
1	5.8%	107	7 years	$ 18,000,000
2	7.1	116	11 years	38,000,000
3	6.2	111	22 years	48,000,000
4	7.4	122	36 years	62,000,000