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Do Homework-Elisha Nelson-Google Chrome n-yes a C Secure https://www.mathxlcom/Student PlayerHomework.aspx?homeworkid=448805232&question; d=1&flushed-fase;&cid-4706779;&center; Managerial Finance Fall 2017_Section 1 (9:00-9:50 AM) Homework: Homework 8 Chapter 9 Save yFinan Score: 0 of 2 pts 1of5(°complete) HW Score: 0%, 0 of 9 pts 3 Main P9-3 (similar to) Question Help * Assign Do Hon Take a Before-tax cost of debt and after-tax cost of debt Personal Finance Problem David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following intformation on the security Sony Bond Par value $100° Cost $890 Copon interest rate 70% Years to maturity 10 corporate tax rate 20% Answer the following questions a. Calculate the befbre-tax cost of the Sony bond using the bond's yield to maturity (YTM) b. Calcufate the aten-dax cost of the Sony bond given the corporate tax rate a. The betretax ost ofthe Sony bond using the bonds yield to matrty mTM) isL%·( Round to two decimal places.) Enter your answer in the answor box and then dlick Check Answer remaning To see what to study next. go to your Study Plan Type here to search

Explanation / Answer

1 Face value (FV) $                                  1,000 2 Coupon rate 7.00% 3 Number of compounding periods per year                                               1 1*2/3 Interest per period (PMT) $                                  70.00 Bond price (PV) $                              (890.00) 4 Number of years to maturity 10 5 = 4*3 Number of compounding periods till maturity (NPER)                                             10 Bond yield to maturity RATE(NPER,PMT,PV,FV) Bond yield to maturity 8.69% (Pre-tax cost of debt) Bond yield to maturity 6.95% (After-tax cost of debt) 8.69%*(1-20%)

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