Answer:
c
Explanation:
Bundling is when separate products of a company are combined together and sold to customers usually at a lower price
One potential advantage of financing corporations through the use of bonds rather than common stock is: ______________
a. the corporation must pay the bonds at maturity
b. the interest on bonds must be paid when due
c. a higher earning per share is guaranteed for existing common shareholders
d. the interest expense is deductible for tax purposes by the corporation.
Answer:
d. the interest expense is deductible for tax purposes by the corporation.
Explanation:
Corporate finance can be regarded as division of finance which handles the way corporations deal with activities such as investment decisions as well as funding sources and capital structuring. Corporate finance primarily deals with maximization of shareholder value by the use of long and short-term financial planning as well as implementation of various strategies. financing of corporations could be through the use of bonds as well as use of common stock.
There are different advantages that is associated to issuing bonds instead of issuing shares of common stock, is that Interest that comes on bonds as well as other debt is deductible as regards to the income tax return of the corporation while the dividends that comes on common stock are not regarded as deductible on the income tax return. It should be noted that One potential advantage of financing corporations through the use of bonds rather than common stock is the interest expense is deductible for tax purposes by the corporation.
The city of williamsburg decided to defease old 6% bonds carried in its electric enterprise fund with new 4.5% bonds. As a result of the defeasance, the city incurred an accounting loss. This loss should be recognized:_______
a. As an adjustment to retained earnings since it is applicable to prior periods.
b. In the year of the defeasance.
c. Over the remaining life of the old bonds or the new bonds whichever is shorter
d. It should not be recognized
Answer: It should not be recognized
Explanation:
Based on the information given, it should be noted that the accounting loss that was incurred as a result of the defeasance should not be recognized.
Since the city of Williamsburg decided to defease old 6% bonds carried in its electric enterprise fund with new 4.5% bonds, then it should be noted that it was only the interest rate that changed, but there wasn't any bonds that were sold. Therefore, the loss should not be recognized.
Aptitude is defined as the ability to _____. learn several different jobs learn a particular kind of job get a job get fired from a job
explain why it is important for marketers to be able to measure the effectiveness of marketing activities.
River co. just paid a dividend of $2 per share out of earnings of $4 per share. If its book value per share is $25 and its stock is currently selling for $40 per share, calculate the required rate of return on the stock.
Answer:
13.4%
Explanation:
Calculation to determine the required rate of return on the stock.
First step
g = (1 - 0.5)(4/25)
g = 0.08*100
g = 8%
Now let determine the required rate of return
r = [(2 * 1.08)/40] + 0.08
r= 13.4%
Therefore the required rate of return on the stock is 13.4%
THE IMPORTANCE OF INFORMATION IN MARKETING
Answer:
u r answer
Explanation:
Marketing information and research address the need for quicker, yet more accurate, decision making by the marketer. These tools put marketers close to their customers to help them understand who they customers are, what they want, and what competitors are doing.
Identify whether the situations described below are example of uneven cash flows or annuity payments.
a. You recently moved to a new apartment and signed a contract to pay monthly rent to your landlord for a year.
b. SOE Corp. hires an average of 10 people every year and matches the contribution of each employee toward his or her retirement fund.
c. Franklinia Venture Capital (FVC) invested in a budding entrepreneur’s restaurant. The restaurant owner promises to pay FVC 10% of the profit each month for the next 10 years.
d. You have committed to deposit $600 in a fixed interest–bearing account every quarter for four years.
Solution :
The Uneven cash flow is defined as the series of unequal payments which is done over a period of time. Whereas if a regular amount is to be made in a fixed period of time, that such payments are known as equal cash flows.
An annuity payments refers to the payment that is made at equal interval of times. It pays a fixed amount of payments for an individual.
In the given situations,
a). Monthly rents payment is annuity payments.
b). Uneven cash flow
c). Uneven cash flow
d). Annuity
Fort Thomas Living is a small publishing company located in the Northern Kentucky. Recently, Fort Thomas Living has contracted with several different local writers to publish various magazines and short-story books. Once such transaction involves an exchange of $10,200. Another transaction involves an exchange of $9,600? Are both of these exchanges of money subject to the disclosure requirements of the Money Laundering Control Act?
Answer: No
Explanation:
The Money Laundering Control Act of 1986 which was passed to curb the effects of large scale money laundering at the federal level, only requires that transactions above $10,000 be disclosed.
There is a transaction here that is only to the tune of $9,600 so this will not be disclosed as it is less than the $10,000 threshold. The other transaction of $10,200 will however, be disclosed.
Ayala Architects incorporated as licensed architects on April 1, 2017. During the first month of the operation of the business, these events and transactions occurred:
Apr. 1 Stockholders invested $18,270 cash in exchange for common stock of the corporation.
1 Hired a secretary-receptionist at a salary of $381 per week, payable monthly.
2 Paid office rent for the month $914.
3 Purchased architectural supplies on account from Burmingham Company $1,320.
10 Completed blueprints on a carport and billed client $1,929 for services.
11 Received $711 cash advance from M. Jason to design a new home.
20 Received $2,842 cash for services completed and delivered to S. Melvin.
30 Paid secretary-receptionist for the month $1,524.
30 Paid $305 to Burmingham Company for accounts payable due.
Required:
Journalize the transaction.
Answer:
Ayala Architects
General Journal
April 1
Debit : Cash $18,270
Credit : Common Stock $18,270
April 1
Debit : Salaries expense ($381 x 4) $1,524
Credit : Salaries Payable $1,524
April 2
Debit : Rent expense $914
Credit : Cash $914
April 3
Debit : Supplies $1,320
Credit : Accounts Payable - Burmingham Company $1,320
April 10
Debit : Accounts Receivable $1,929
Credit : Service Revenue $1,929
April 11
Debit : Cash $711
Credit : Deferred Revenue
April 20
Debit : Cash $2,842
Credit : Service Revenue $2,842
April 30
Debit : Salaries expense $1,524
Credit : Cash $1,524
April 30
Debit : Accounts Payable - Burmingham Company $305
Credit : Cash $305
Explanation:
Journal entry for the transactions have been prepared above.
Early colonists came to America:_________.
a. for a wide range of economic and political agendas as well as for religious and philosophical reasons.
b. to set up a democratic political system.
c. to avoid the widespread poverty and economic depression that was sweeping Europe.
d. solely to obtain land. solely to escape religious persecution.
Answer: a. for a wide range of economic and political agendas as well as for religious and philosophical reasons.
Explanation:
There were various reasons the early colonists came to Northern America to found the colonies such as for economic and political reasons and others for religious reasons.
William Bradford for instance, helped found the Plymouth Colony as a haven for Puritan separatists like himself to escape persecution in England. John Smith on the other hand, came more for economic reasons.
Then there was James Oglethorpe of Georgia who wanted to found a home for the "worthy poor" of England so that they would have a chance to make something of themselves.
Vandelay Industries stock has a 50% chance of producing a 20% return, a 30% chance of producing a 8% return, and a 20% chance of producing a -21% return. What is Vandelay expected rate of return?
Answer:
8.2%
Explanation:
Calculation to determine the expected rate of return
Expected rate of return= (.50 (.20)) +(.30(.08)) + (.20*(-.21)
Expected rate of return=0.1+0.024+(0.042)
Expected rate of return=.082*100
Expected rate of return=8.2%
Therefore the expected rate of return is 8.2%
Several years ago, Castles in the Sand Inc. issued bonds at face value of $1,000 at a yield to maturity of 8%. Now, with 7 years left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 12%. What is the price of the bond now
Answer:
$814.10
Explanation:
Calculation to determine what the price of the bond now
Using this formula
Bond price = PV of coupon payments + PV of face value
Bond price= C×((1 / r) – {1 / [r(1 + r)t]}) + FV / (1 + r)t
Let plug in the formula
Bond price= [(.080 ×$1,000) / 2] ×[[1 / (.12 / 2)] – (1 / {(.12 / 2)[1 + (.12 / 2)](7 ×2)})] + $1,000 / [1 + (.12 / 2)](7 ×2)
Bond price= $814.10
Therefore the price of the bond now is $814.10
Sturbridge Company manufactures fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. Which of the following should not be treated as direct costs, assuming the cost object is individual clocks?
a. The clock face
b. The timing mechanism for each clock
c. Wood
d. Depreciation on dock-making equipment
Answer:
D)depreciation on clock making equipment
Explanation:
From the question we are informed about Sturbridge Company manufactures who fine furniture and grandfather clocks. Sturbridge has an excellent reputation, and each grandfather clock sells for several thousand dollars. In this case, all the following should be treated as direct costs, assuming the cost object is individual clocks;
✓ The clock face
✓The timing mechanism for each clock
✓Wood
A direct cost can be regarded as price which can be tied directly to manufacture of particular goods or services. Direct and indirect costs can be regarded as two major types of costs that can be incurred by companies. Direct costs are been regarded as variable costs often, i.e this cost could fluctuate as q result of production levels like inventory.
Red Co. recorded a right-of-use asset of $140,000 in a 10-year finance lease. Payments of $22,784 are made annually at the end of each year. The interest rate charged by the lessor and known by Red was 10%. The balance in the lease payable after two years will be: (Round your final answer to the nearest whole dollar.)
Answer: $121554
Explanation:
Lease liability = $140,000
Less: Lease liability in 1st year= $8784
Lease payable after one year = $131216
Less: Lease liability in 2nd year = $9662.40
Lease payable after 2nd year = $121553.60 = $121554
Note:
Lease liability in 1st year:
= $22,784 - (10% × $140000)
= $22784 - $14000
= $8784
Lease liability in 2nd year:
= $22784 - (10% × $131216)
= $22784 - $13121.60
= $9662.40
he following materials standards have been established for a particular product: Standard quantity per unit of output 4.2 meters Standard price $ 18.40 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,200 meters Actual cost of materials purchased $ 138,600 Actual materials used in production 6,700 meters Actual output 1,550 units. What is the materials price variance for the month?
a. $3,658 U
b. $7,700 U
c. $11,770 U
d. $6,120 U
Answer:
d. $6,120 U
Explanation:
Calculation to determine the materials price variance for the month
Using this formula
Materials price variance = (AQ × AP) – (AQ × SP)
Let plug in the formula
Materials price variance = $138,600 – (7,200 meters × $18.40 per meter)
Materials price variance = $138,600 – $132,480
Materials price variance = $6,120 U
Therefore Materials price variance is $6,120 U
Lara Technologies is considering a cash outlay of $239,000 for the purchase of land, which it could lease out for $39,450 per year. If alternative investments that yield a 15% return are available, the opportunity cost of the purchase of the land is a.$39,450 b.$35,850 c.$75,300 d.$3,600
Answer:
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Explanation:
to the end of the sixth year;
b/ The number of years required before the capital stock exceeds $200 000.
From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that Group of answer choices bond interest is deductible for tax purposes. interest must be paid on a periodic basis regardless of earnings. income to stockholders may increase as a result of trading on the equity. the bondholders do not have voting rights.
Answer:
interest must be paid on a periodic basis regardless of earnings.
Explanation:
A bond can be defined as a debt or fixed investment security, in which a bondholder (investor or creditor) loans an amount of money to the bond issuer (government or corporations) for a specific period of time. The bond issuer are expected to return the principal (face value) at maturity with an agreed upon interest (coupon), which are paid at fixed intervals.
The disadvantages of bonds are listed below as;
1. Bonds can decrease a person's return on equity.
2. Bonds require a payment of the principal amount.
3. Bonds typically require a payment of periodic interest.
Generally, most bonds with shorter maturity time respond less dramatically to changes in interest rates when compared to bonds having longer maturity. Thus, the risk associated with short bonds isn't really significant because their interest rates are less likely to change substantially within that short period of time unlike bonds with longer maturity.
Hence, regardless of the earnings by bondholders, interest must be paid on a periodic basis on a long-term bond.
At an activity level of 6,000 units the cost for maintenance is $7,200 and at 10,000 units the cost for maintenance is $11,600. Using the high-low method, the cost formula for maintenance is: Group of answer choices
Answer:
y = $1.10x + $600
Explanation:
Step 1 : Variable Cost calculation
Variable Cost = ($11,600 - $7,200) ÷ (10,000 - 6,000)
= $1.10
Step 2 : Fixed Cost calculation
Total cost = Variable Cost + Fixed Cost
hence,
Fixed Cost = Total Cost - Variable Cost
= $11,600 - (10,000 x $1.10)
= $600
Step 3 : Cost formula for maintenance
Total cost = Variable Cost + Fixed Cost
therefore,
y = $1.10x + $600
where,
y = Total cost
x = Activity level
Using the high-low method, the cost formula for maintenance is : y = $1.10x + $600
WHAT IS THE SUPPLY CHAIN FRAMEWORK'S IN OKADA? WHAT IS THE MODEL ?
In its 2016 annual report, Lockheed Martin reported net earnings of $5,302 million and dividends paid of $2,048 million. Your forecast of net income for Lockheed Martin for 2017 is $5,504 million. What are projected dividends for the company for 2017
Answer:
The dividend for 2017 will be = $2124.98
Explanation:
The net earnings for the year 2016 = $5302
Dividend paid for the year 2016 = $2048
The forecast for the income of 2017 = $5504
The projected dividend for the year 2017 = 5504 x (2047 / 5302)
The projected dividend for the year 2017 = 2124.98
The dividend for 2017 will be = $2124.98
theo anh chị quan điểm về bán hàng hiện nay và trước kia khác nhau như thế nào
Explanation:
Trả lời ngắn gọn thôi nhe ^^
Bán hàng trước kia (mình đang chọn thời điểm trước khi có công nghệ, trước khi có mạng internet nha) thì sẽ bị hạn chế rất nhiều (thời gian, giao tiếp, v.v) so với bán hàng thời điểm hiện tại (Dẫn chứng: hiện tại có thể giao bán rất đơn giản qua việc livestream và ship trong khi trước kia thì việc giao bán hàng rất khó khăn..)
Thời điểm hiện tại có rất nhiều "cách" bán hàng khác nhau so với trước kia: đa cấp, online, ...
Bạn có thể tham khảo các trang khác nữa nhưng brainly ko cho mk đưa web lên mk rất xin lỗi ;-;
(Bạn có thể tra "kinh doanh hiện đại khác trước kia như thế nào" hoặc "bán hàng hiện nay và trước kia khác nhau như thế nào" thì sẽ nhận được khá nhiều trang hữu dụng nha)
<3 Chúc bạn có 1 ngày tốt lành nha!!
Highsmith Rental Company purchased an apartment building early in 2021. There are 20 apartments in the building and each is furnished with major kitchen appliances. The company has decided to use the group depreciation method for the appliances. The following data are available:
Appliance Cost Residual Value Service Life (in Years)
Stoves $15,000 $3,000 6
Refrigerators 10,000 1,000 5
Dishwashers 8,000 500 4
In 2019, three new refrigerators costing $2,700 were purchased for cash. The old refrigerators, which originally cost $1,500, were sold for $200.
Requried:
a. Calculate the group depreciation rate, group life, and depreciation for 2016.
b. Prepare the journal entries to record the purchase of the new refrigerators and the sale of the old refrigerators.
Answer:
A. Group depreciation rate 17.197%
Group life 5.02 years
Depreciation for 2016 $5,675
B. 2019
Dr Stove, refrigerator and dishwasher $2,700
Cr Cash $2,700
2019
Dr Accumulated Depreciation $1,300
Dr Cash $200
Cr Stove, refrigerator and dishwasher $1,500
Explanation:
A. Calculation to determine the group depreciation rate, group life, and depreciation for 2016.
First step is the Computation of Group depreciation rate, group life and depreciation for 2016
Assets Original Residual Depreciation Estimated Depreciation
Cost Value Cost Life-Years per year-SLM
Stoves $15,000-$3,000= $12,000 6 $2,000 ($12,000/6=$2,000)
Refrigerators $10,000-$1,000=$9,000 5 $1,800 ($9,000/5=$1,800)
Dishwashers $8,000-$500=$7,500 4 $1,875
($7,500/4=$1,875)
Total $33,000 $4,500 $28,500 $5,675
Now let determine the group depreciation rate, group life, and depreciation for 2016.
Calculation for group depreciation rate using this formula
Group Depreciation Rate = Total depreciation per year ÷ Total original cost
Let plug in the formula
Group depreciation rate = $5,675 ÷ $33,000*100
Group depreciation rate= 17.197%
Calculation for Group life using this formula
Group life = Total depreciation cost ÷ Total depreciation per year
Let plug in the formula
Group life = $28,500 ÷ $5,675
Group life = 5.02 years
Calculation for Depreciation for 2016 using this formula
Depreciation for 2016= Original Cost × Group Depreciation Rate
Let plug in the formula
Depreciation for 2016 = $33,000 × 0.17197
Depreciation for 2016= $5,675
Therefore the group depreciation rate is 17.197%, group life is 5.02 years, and depreciation for 2016 is $5,675
B. Preparation of the journal entries to record the purchase of the new refrigerators and the sale of the old refrigerators.
2019
Dr Stove, refrigerator and dishwasher $2,700
Cr Cash $2,700
(To record purchase of new refrigerator)
2019
Dr Accumulated Depreciation $1,300
($1,500-$200)
Dr Cash $200
Cr Stove, refrigerator and dishwasher $1,500
(To record sale of old refrigerator)
Engler Company purchases a new delivery truck for $60,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Engler record as the cost of the new truck? Group of answer choices $66,050 $65,890 $64,000 $65,600
Answer: $65,890
Explanation:
When it comes to capitalizing fixed assets, every cost that was incurred to get the fixed asset ready for use will be included in the cost price.
The cost price here is therefore;
= Cost price + Sales taxes + Logo + safety testing
= 60,000 + 4,000 + 1,600 + 290
= $65,890
On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,540 in assets in exchange for its common stock to launch the business. On October 31, the company’s records show the following items and amounts. Retained earnings, October 1 as $0.
Cash $12,650 Cash dividends $1,570
Accounts receivable 13,520 Consulting revenue 13,520
Office supplies 2,850 Rent expense 3,110
Land 45,940 Salaries expense 6,490
Office equipment 17,530 Telephone expense 850
Accounts payable 8,110 Miscellaneous expenses 660
Common stock 83,540
Required:
Using the above information prepare an October 31 balance sheet for Emst Consulting ERNST.
Solution :
Particulars Amount
Consulting revenue $13,520
Less: Expenses
Rent Expense ($3,110)
Salaries Expense ($6,490)
Telephone Expense ($850)
Miscellaneous Expense ($660)
Net Profit $2,410
Statement of Retained Earnings
Particulars Amount
Retained Earnings $2,410
Less : Cash Dividend ($1,570)
Net Retained Earnings $840
Ernst Consulting Balance Sheet as of October 31
Assets Amount Liabilities Amount
Current Assets Current Liabilities
Cash $12,650 Accounts Payable $8,110
Office Supplies $2,850
Accounts Receivable $13,520
Non-Current Assets Equity
Office Equipment $17,350 Common Stock $83,540
Land $45,940 Retained Earnings $840
Total $92,490 Total $92,490
Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary).Week Time Series ForecastValue 1 18 2 15 3 16 4 13 5 17 6 16MSE:
The forecast for week 7:
Use = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 7.Week Time Series Forecast
Value
1 18
2 15
3 16
4 13
5 17
6 16MSE:
The forecast for week 7:
Compare the three-week moving average forecast with the exponential smoothing forecast using = 0.2. Which appears to provide the better forecast based on MSE?
Answer:
a. We have:
MSE: 63.03
The forecast for week 7: 15.33
b. We have:
MSE: 47.49
The forecast for week 7: 16.35
c. The exponential smoothing forecast using = 0.2. appears to provide the better forecast based on MSE.
Explanation:
a. Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary).
Note: See Part a of the attached excel file for the Calculations of Forecast, Error, and Error^2.
From the attached excel file, we can have:
MSE = Mean squared error = Total of Error^2 / Number of observation under the Error^2 = 252.11 / 4 = 63.03
The forecast for week 7 = 15.33
b. Use = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 7.
Note: See Part b of the attached excel file for the Calculations of Forecast, Error, and Error^2.
From the attached excel file, we can have:
MSE = Mean squared error = Total of Error^2 / Number of observation under the Error^2 = 284.96 / 6 = 47.49
The forecast for week 7 = 16.35
Note that under exponential smoothing, forecast for week 2 has to be the Time Series Value for week 1.
b. Compare the three-week moving average forecast with the exponential smoothing forecast using = 0.2. Which appears to provide the better forecast based on MSE?
Since 47.49 MSE of the exponential smoothing forecast using = 0.2 is less than 63.03 MSE of the three-week moving average forecast, it implies that the exponential smoothing forecast using = 0.2. appears to provide the better forecast based on MSE.
It has been said that Earned Value Management (EVM) came about because the Federal Government often used "Cost-plus" contractors with project organizations. Cost-plus contracting allows the contractor to recover full project development costs plus accumulate profit from these contracts. Why would requiring contractor firms to employ earned value management help the government hold the line against project cost overruns?
Answer:
Earned Value Management (EVM)
The Federal Government requires contractor firms to employ earned value management because it enables it to assess the work that has been completed against an established baseline plan in terms of technical, time, and cost performance.
Armed with this information, it is in a better position to make important project decisions and help to control over-spending.
Explanation:
Earned value management (EVM) as a integrated project management methodology details the project time schedule, costs, and scope to ensure correct measurement of project performance. Using planned and actual values, EVM enables future predictions, improving the ability of project managers to adjust according to requirements.
Renee paid $4,000 in mortgage interest on a $110,000 mortgage that was taken out when she bought her home several years ago. She also has a home equity loan of $130,000 that she used to pay for a cruise around the world. The interest on the home equity loan was $8,000. What amount is deductible as interest expense for Renee in 2021
Answer:
The amount that is deductible as interest expense for Renee in 2021 is:
= $4,000.
Explanation:
a) Data:
Home mortgage - $110,000
Interest on home mortgage = $4,000
Home equity loan for a cruise around the world = $130,000
Interest on the home equity loan = $8,000
Deductible interest expense for Renee in 2021 is $4,000
b) Usually, the interest expenses that a taxpayer pays on her home equity loan to enjoy a cruise around the world, on personal credit card, on automobile loan, and on other types of personal consumer finance interests are not tax-deductible.
Say that investment increases by $60 for each interest rate drop of 1 percent. Say also that the expenditures multiplier is 4. If the money multiplier is 5, and each 5-unit change in the money supply changes the interest rate by 1 percent, what open market policy would you recommend to increase income by $240
Ken's home has a replacement value of $200,000. Ken insured the home for $150,000 under an unendorsed Homeowners 3 policy. The roof of Ken's home was damaged by a windstorm. The replacement cost of the damaged roof is $16,000. The actual cash value of the loss is $12,000. How much will Ken receive from his insurer to settle this claim
Answer: $15,000
Explanation:
Using a Homeowners 3 policy, Ken will get the higher amount out of two amounts which are:
The actual cash value of the damaged area. An amount calculated as follows:= (Amount of Insurance cover on home / 80% of Replacement Cost) * Cost of Repair to damaged area.
The actual cash value is $12,000
The second amount is:
= (Amount of Insurance cover on home / 80% of Replacement Cost) * Cost of Repair to damaged area.
= 150,000 / (80% * 200,000) * 16,000
= 0.9375 * 16,000
= $15,000
Ken will receive the higher amount of $15,000.
Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semiannual coupon rate of 4 percent 3 years ago. The bond currently sells for 108 percent of its face value. The company’s tax rate is 22 percent.
Answer:
Pretax cost of debt = 3.48%
Aftertax cost of debt = 2.71%
Explanation:
Missing word "What is the pretax cost of debt and aftertax cost of debt"
Coupon rate = 4%
YTM = 22
Nper = YTM*2 = 44
PMT = 1000*4%/2 = 20
FV = 1000
PV = 1080
Rate = rate(nper, pmt, -pv, fv)
Rate = rate(44, 20, -1080, 1000)
Rate = 0.0174
Rate = 1.74%
Pretax cost of debt = Rate * 2
Pretax cost of debt = 1.74% * 2
Pretax cost of debt = 3.48%
Aftertax cost of debt = [3.48% * (1 - 0.22)]
Aftertax cost of debt = 3.48% * 0.78
Aftertax cost of debt = 0.0348 * 0.78
Aftertax cost of debt = 0.027144
Aftertax cost of debt = 2.71%
