Estimate the cost of debt using a synthetic bond rating. The following are the estimated synthetic...
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Estimate the cost of debt using a synthetic bond rating. The following are the estimated synthetic bond ratings based on interest coverage ratio. Interest Coverage Ratio > 8.50 6.50-8.50 5.50 -6.50 4.25 -5.50 3.00 -4.25 2.50 -3.00 2.25-2.50 2.00 -2.25 1.75 -2.00 1.50 -1.75 1.25 -1.50 0.80 1.25 0.650.80 0.20 0.65 <<0.20 Synthetic Bond Rating AAA AA A+ A A- BBB BB+ BB B+ B B- CCC CC C D Calculate the cost of debt of Target, Inc. Default Spread 0.35 % 0.50 % 0.70 % 0.85 % 1.00 % 1.50 % 2.00 % 2.50 % 3.25 % 4.00 % 6.00 % 8.00 % 10.00 % 12.00 % 20.00 % Estimate the cost of debt using a synthetic bond rating. The following are the estimated synthetic bond ratings based on interest coverage ratio. Interest Coverage Ratio > 8.50 6.50-8.50 5.50 -6.50 4.25 -5.50 3.00 -4.25 2.50 -3.00 2.25-2.50 2.00 -2.25 1.75 -2.00 1.50 -1.75 1.25 -1.50 0.80 1.25 0.650.80 0.20 0.65 <<0.20 Synthetic Bond Rating AAA AA A+ A A- BBB BB+ BB B+ B B- CCC CC C D Calculate the cost of debt of Target, Inc. Default Spread 0.35 % 0.50 % 0.70 % 0.85 % 1.00 % 1.50 % 2.00 % 2.50 % 3.25 % 4.00 % 6.00 % 8.00 % 10.00 % 12.00 % 20.00 %
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To estimate the cost of debt for Target Inc the interest coverage ratio is typically calculated as e... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
Posted Date:
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