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Chapter 4: Q11-6BP (page 363)
Calculate the aftertax cost of debt under each of the following conditions:
Yield Corporate Tax Rate
a. 8.0% 26%
b. 9.0 35
c. 8.0 0
a. After tax cost of debt of the company is 0.0592
b. After tax cost of debt of the company is 0.315
c. After tax cost of debt of the company is 0.08
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Carrie Tune will receive \(19,500 for the next 20 years as a payment for a new song she has written. If a 10 percent rate is applied, should she be willing to sell out her future rights now for \)160,000?
If you invest $9,000 today, how much will you have c. In 25 years at 14 percent?
Your aunt offers you a choice of \(20,100 in 20 years or \)870 today. If money is discounted at 17 percent, which should you choose?
Question: You will receive $6,800 three years from now. The discount rate is 10 percent. c. What is the value of your investment today? Multiply your answer to part b by (1/1.10).
With inflation, what are the implications of using LIFO and FIFO inventory methods? How do they affect the cost of goods sold?
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