Ying Import has several bond issues outstanding, each making semiannual interest

Question

Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds are listed in the following table. If the corporate tax rate is 31 percent, what is the aftertax cost of Ying's debt? (Do not round your intermediate calculations.)
NOTE: Bond prices are quoted as a % of par (as is typical). Get the market values and then take a market value-weighted average of the YTM. Don't forget to adjust for tax, but leave the weighted average as an APR.

Bond

Coupon Rate

Price Quote

Maturity

Face Value

$62,000,000   

Bond

Coupon Rate

Price Quote

Maturity

YTM

Face Value

1 5.9%      103      3 years        4.81% $ 16,000,000    2 7%         111      7 years        5.11% $35,000,000    3 5.8%         101      15.5 years        5.7% $44,000,000    4 7%         111      30.5 years        6.19%

$62,000,000   

Explanation / Answer

103/(103+111+101+111) *4.81= 1.163

111/(103+111+101+111) *5.11= 1.3315

101/(103+111+101+111)* 5.7= 1.3514

111/(103+111+105+111)* 6.19= =1.5979

Add and multiply by (1-.31) and you get 3.7562%

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