ZU Liberty University Login x MM Homework 5 C ezto.mheducation.com /hm.tpx T Que
ID: 2717714 • Letter: Z
Question
ZU Liberty University Login x MM Homework 5 C ezto.mheducation.com /hm.tpx T Question 16 (ot 26) 16 2.00 points Keyspan Corp. is planning to issue debt that will mature in 2035. In many respects, the issue is similar to he currently outstanding debt of the corporation. Use Table 11-3 a. Calculate the yield to maturity on similarly outstanding debt for the firm, in terms of maturity. (Input your answer as a percent rounded to 2 decimal places.) Yield Assume that because the new debt wil be issued at par, the required yield to maturity will be .15 percent higher than the value determined in part a. b. What is the new yield to maturity? (Do not round intermediate calculations Input your answer as a percent rounded to 2 decimal places.) Yield c. f the firm is in a 30 percent tax bracket, what is the aftertax cost of debt for the yield determined in part b? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) After tax cost of debt Save & Exit Submit 5.28 PM /24/2015Explanation / Answer
a) Yield = 4.73%
b) New YTM = 4.73 + 0.15
New YTM = 4.88%
c)
After tax cost of debt = YTM*(1-tax rate)
After tax cost of debt = 4.88*(1-30%)
After tax cost of debt = 3.42%
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.