Nico trading corporation is considering issuing longdashterm debt. the debt would have a 30dashyear maturity and a 10 percent coupon rate. in order to sell the issue, the bonds must be underpriced at a discount of 5 percent of face value. in addition, the firm would have to pay flotation costs of 5 percent of face value. the firm's tax rate is 21 percent. given this information, the afterdashtax cost of debt for nico trading would be

After tax cost of debt is 8.82%

Explanation:

Given:

Assume coupon payments are made annually.

Face value (assumed) (FV) = $1,000

coupon rate = 10% or 0.1

Coupon payment (PMT) = $100

Maturity period (nper) = 30

Flotation cost = 0.05×1000 = $50

Discount = 0.05×1000 = $50

Price of debt = Face value - Discount - Flotation cost

                     = $1000 - 50 - 50

                     = $900

Calculate rate using spreadsheet function =rate(nper,pmt,PV,FV)

Rate or YTM(yield to maturity) is 11.17%

Tax rate = 21% or 0.21

After tax cost of debt = 0.1117 (1 - 0.21)

                                    = 0.0882 or 8.82%

x=3

step-by-step explanation:

this is really simple i saw that there was only one term (5x) and thought if that was 15 what would i have to multiply everything else to get it there? well if 5x became 15 then x would have to be 3 so plug the 3 in the x for the other equations and you get 15 for the other ones. so there you go. : )

answer; consideration;