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I have attach the word documetn.Let me know if this works thanks,Did the attachment work? Let me know if there is anything else I can do,Hi, There are a couple of questions that were not answered in the word document here are the questions: jiminy's Cricket Farm issued a 30-year, 8 percent semi-annual bond 4 years ago. The bond currently sells for 94 percent of its face value. The book value of the debt issue is \$21 million. The company's tax rate is 34 percent, and the bond has a YTM of 8.58%. In addition, the company has a second debt issue on the market, a zero coupon bond with 4 years left to maturity; the book value of this issue is \$81 million and the bonds sell for 77 percent of paR. What is the company's total book value of debt? A)126,240,000 B) 127,050,000 C) 76,950,000 D) 82,110,000 E) 102,000,000. What is the company's total market value of debt? a)102,000,000 B) 82,110,000 C) 86,215,500 C) 85,394, 400 D)78,004,500. What is your best estimate of the aftertax cost of debt (leave as an APR) A) 4.46% B)5.3% C)5.05% D)3.55% E) 4.69 Johnson Tire Distributors has an unlevered cost of capital of 12 percent, a tax rate of 34 percent, and expected earnings before interest and taxes of \$1,500 in perpetuity. The company has \$2,900 in bonds outstanding that have a 6 percent coupon and pay interest annually in perpetuity. The bonds are selling at par value. What is the cost of equity? A) 11.05 percent B) 13.81 percent C) 12.43 percent D) 8.29 percent E) 9.67 percent You currently own 600 shares of JKL, Inc. JKL is an all equity firm that has 75,000 shares of stock outstanding at a market price of \$40 a share. The company's earnings before interest and taxes are \$140,000. JKL has decided to issue \$1 million of debt at 8 percent interest. This debt will be used to repurchase shares of stock. How many shares of JKL stock must you sell to unlever your position if you can loan out funds at 8 percent interest? Ignore taxes. A)120 SHARES B)150 SHARES C)180 SHARES D)200 SHARES E)250 SHARES The June Bug has a \$19,000,000 bond issue outstanding. These bonds have a 10 percent coupon, pay interest semiannually in perpetuity, and have a current market price equal to 98.6 percent of face value. The tax rate is 39 percent. What is the amount of the after-tax annual interest payment made by the firm? A)1,154,000) B) 1,209,000 C) \$3,948 D) 1,159,000 E) 1,174,000 the solution for the following problem is not included in the options provided Douglass & Frank has a debt-equity ratio of 3.0. The pre-tax cost of debt is 6 percent while the unlevered cost of capital is 21 percent. What is the cost of equity if the tax rate is 39 percent? A51.45% B) 15.92% C) 48.45%D) 12.40% E) 21.00% Solution provided: Return on assets = (D/V)*RD + (E/V)*RE 16.1% = (0.72/1.72)*8.7% + (1/1.72)*Cost of equity 16.1% - 3.64% = (1/1.72)*Cost of equity Cost of equity = 12.46%*1.72 = 21.43%

Paper#8942 | Written in 18-Jul-2015

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