How do I figure out "Cost of Debt" Problems? - after-tax cost of debt calculator, bond
Here lies the problem: Please give me a simple way to solve this problem, and if anyone knows how to use a Calculator Texas Business instrumets you tell me how.
Zephyr Corporation is considering a new investment will be funded at 33% debt. The company was able to sell new bonds at par value to $ 1000 net price of 945 $. The discount is 12%, and bonds maturing in 15 years. If the company is located in a level of 34% VAT, which is what the after-tax cost of capital bond markets to Zephyr?
Do Show me how to be and how and what # 's are: N, I, PV, FV, and payment
Please Finance Majors
Thursday, February 18, 2010
After-tax Cost Of Debt Calculator, Bond How Do I Figure Out "Cost Of Debt" Problems?
1 comment:
n = 15
PV = 945
PMT = -120
FV = -1000
CPT i / and
= 12.84
This is the heart of the pre-tax cost of debt.
After-tax cost of debt = (1-0.34) * 12.84 = 8.47%
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