. 2. Flotation costs and the cost of debt In March of 2020 PepsiCo, Inc. (PEP) sold...
Fantastic news! We've Found the answer you've been seeking!
Question:
.
2.
Transcribed Image Text:
Flotation costs and the cost of debt In March of 2020 PepsiCo, Inc. (PEP) sold $750 million worth of 40-year 4.25% coupon bonds that pay semi-annual interest. At the time the bonds were issued, the market paid $994.11 per bond and the flotation cost was $18.25 per bond. Pepsi's corporate tax rate is 21%. a. Ignoring flotation costs, what is Pepsi's before-tax and after-tax costs of debt? b. Considering flotation costs, what is Pepsi's before-tax and after-tax costs of debt? C a. Ignoring flotation cost. Pepsi's before-tax cost of debt is%. (Round to two decimal places.) Flotation costs and the cost of debt In March of 2020 PepsiCo, Inc. (PEP) sold $750 million worth of 40-year 4.25% coupon bonds that pay semi-annual interest. At the time the bonds were issued, the market paid $994.11 per bond and the flotation cost was $18.25 per bond. Pepsi's corporate tax rate is 21%. a. Ignoring flotation costs, what is Pepsi's before-tax and after-tax costs of debt? b. Considering flotation costs, what is Pepsi's before-tax and after-tax costs of debt? C a. Ignoring flotation cost. Pepsi's before-tax cost of debt is%. (Round to two decimal places.)
Expert Answer:
Answer rating: 100% (QA)
1 2 pepsico BA II PLUS FINANCIAL CALCULATOR TERMS COMPOUNDING PER YEA... View the full answer
Related Book For
Thermodynamics An Engineering Approach
ISBN: 978-0073398174
8th edition
Authors: Yunus A. Cengel, Michael A. Boles
Posted Date:
Students also viewed these accounting questions
-
2 kg of hydrogen (H2) is mixed with 2 kg of oxygen (O2). If the final mixture has a volume of 3 m3: Determine (a) Molar mass (b) Specific volume. (c) The molar specific volume of the final mixture.
-
2 In an experiment to compare two diets for fattening beef steers, nine pairs of animals were chosen from the herd; members of each pair were matched as closely as possible with respect to hereditary...
-
For a 2 x 2 linear DE system we can make a quick handsketch of the elliptical trajectories as follows. (a) All the elliptical trajectories are concentric and similar, so we can get all the key...
-
Miami Tropical stock has a beta of 1.25. The risk-free rate of return is 4.34 percent and the market risk premium is 9.02 percent. What is the expected rate of return on this stock? 10.23 percent...
-
1. An issue of common stock is selling for $57.20. The year end dividend is expected to be $2.32 assuming a constant growth rate of 6%. What is the required rate of return? A) 10.3% B) 10.1% C) 4.1%...
-
Why will a volleyball held beneath the surface of water have more buoyant force than if it is floating?
-
What is the main difference between environmental accounting and ecological accounting?
-
Burns Boats wants to assemble 50 boats per 8-hour day, using a production line. Total task time for each boat is 45 minutes. a. What is the takt time? What is the theoretical mini mum number of...
-
Let X1 and X2 be iid Poisson(X) random variables. Show that TX+2X2 is not a sufficient statistic for >. (Hint: the Factorization Theorem uses the word if and only if. Alternatively, find a minimal...
-
1. A building owned by Hopewell Company was recently valued at $850,000 by a real estate expert. The president of the company is questioning the accuracy of the firm's latest balance sheet because it...
-
_____ are the people a consumer turns to for reinforcement of a decision. A. Decision groups B. Response groups C. Loyalty groups D. Reference groups _____ are lists of an organizations own...
-
Use logarithmic differentiation to find f'(x). (a) f(x) = 23 2+1 (b) f(x)=(3x+1)2.
-
BMX Company has one employee. FICA Social Security taxes are 6.2% of the first $137,700 paid to its employee, and FICA Medicare taxes are 1.45% of gross pay. For BMX, its FUTA taxes are 0.6% and SUTA...
-
Let V(x, y) = 6 ln(-135y +17x). Indicate the range of V using interval notation.
-
Weller Company's budgeted unit sales for the upcoming fiscal year are provided below: The company s variable selling and administrative expense per unit is $ 2 . 4 0 . Fixed selling and...
-
CALCULATE COG'S and ENDING INVENTORY USING FIFO and LIFO METHOD ? DATE PARTICULARS UNITS COST PER UNIT TOTAL COST AUG 1 BEGINNING INVENTORY 10 @ $91 $910 AUG 3 PURCHASED 15 @ $106 $1590 AUG 17...
-
Task: Name 5 stakeholders for planning a wedding What is scope creep? Name four elements of a Project Initiation Document Identify the three stages in initial planning in order to create a PID What...
-
In the busy port of Chennai, India, the number of containers loaded onto ships during a 15-week period is as follows: 1. Develop a linear trend equation to forecast container loadings. 2. Using the...
-
A piston-cylinder device contains products of combustion from the combustion of a hydrocarbon fuel with air. The combustion process results in a mixture that has the composition on a volume basis as...
-
Refrigerant-134a enters an adiabatic compressor as saturated vapor at 100 kPa at a rate of 0.7 m3/min and exits at 1-MPa pressure. If the isentropic efficiency of the compressor is 87 percent,...
-
Hydrogen is contained in a piston-cylinder device at 14.7 psia and 15 ft3. At this state, a linear spring (F ~ x) with a spring constant of 15,000 lbf/ft is touching the piston but exerts no force on...
-
When there is a concentration gradient in the system, show that the potential gradient is composed of two terms, (i) an Ohm's-law contribution and (ii) a diffusional contribution. State the equation...
-
Copper is deposited at a cathode from solution with a bulk concentration of \(0.5 \mathrm{M}\) at the rate of \(3.0 \mathrm{~g} / \mathrm{m}^{2} \cdot \mathrm{s}\). Find the surface concentration of...
-
Find the mobility of \(\mathrm{H}^{+}, \mathrm{OH}^{-}\), and other ions from the diffusivity data given in Table 22.1. Table 22.1. Diffusion coefficients of ions in water at 25 C. H+ Na+ K+ Ca+ OH-...
Study smarter with the SolutionInn App