Results 1 to 1 of 1

Math Help - Cost of debt for use in WACC calculation

  1. #1
    Newbie
    Joined
    Apr 2010
    Posts
    3

    Cost of debt for use in WACC calculation

    Several years ago the xxxxx Co. sold a $1,000 par value bond that now has 25 years to maturity and an 8.00% annual coupon that is paid quarterly . The bond currently sells for $900.90, and the company's tax rate is 40%. What is the component cost of debt for use in the WACC calculation?

    i'm using a calculator of type HP10bII

    i think that $1,000 par value bond is the FV since that's what it's worth at the end


    where does the %40 tax rate matter?
    how do i set up the ecuasion?

    i figured it out so nevermind, in calc. HP10bII it follows:
    4p/yr
    n=50 (25x4, quarterly)
    pv=900.90
    pmt= 20 (80/4)
    fv=1000

    then times that by 1-.4(tax rate) to get the answer
    Last edited by weskaiser; April 16th 2010 at 08:16 PM.
    Follow Math Help Forum on Facebook and Google+

Similar Math Help Forum Discussions

  1. Total Cost calculation
    Posted in the Business Math Forum
    Replies: 2
    Last Post: July 25th 2011, 06:05 AM
  2. Beta, WACC stuff, need a little help :)
    Posted in the Business Math Forum
    Replies: 1
    Last Post: January 30th 2009, 08:30 AM
  3. Approximate cost calculation
    Posted in the Advanced Applied Math Forum
    Replies: 1
    Last Post: July 16th 2008, 12:18 AM
  4. Calculating target capital and WACC
    Posted in the Business Math Forum
    Replies: 0
    Last Post: November 5th 2007, 08:28 PM
  5. Least cost calculation, plz help!
    Posted in the Calculus Forum
    Replies: 3
    Last Post: April 30th 2007, 11:31 PM

Search Tags


/mathhelpforum @mathhelpforum