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Homework answers / question archive / SM33 Corp has $1,000 par value bonds outstanding that currently sell at a price of $940 and mature in 25 years

SM33 Corp has $1,000 par value bonds outstanding that currently sell at a price of $940 and mature in 25 years

Accounting

SM33 Corp has $1,000 par value bonds outstanding that currently sell at a price of $940 and mature in 25 years. These bonds have a 7.50% annual coupon rate, but coupon payments are made semiannually. If the firm's tax rate is 30%, what is the after-tax cost of debt for SM33 Corp? Select one: a. 4.03% b.7.69% C. 8.06% d. 2.82% e. 5,64% The YTM on the outstanding bonds for Brick-Lee Corp. is 6,50%. Brick-Lee common stock currently sells for $20 a share. Brick-Lee just paid an annual dividend of $1.00 a share to its common shareholders, and analysts expect these dividends to grow indefinitely at 6% per year. Brick L.ee will incur flotation costs of 10% when issuing new shares of common stock. Brick-Lee has a target capital structure of 25% debt and 75% equity, Compute the WACC for Brick-Lee assuming it has a 40% marginal tax rate and must issue new shares of common stock of Select one: a 7.65% b. 9.89% C. 8.96% d. 6.59%

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