Question: Note: Round your answers for each question as instructed. But carry your unrounded values forward to the later parts of the question where required. Planet
Note: Round your answers for each question as instructed. But carry your unrounded values forward to the later parts of the question where required. Planet Express has issued a 30-year, 6.4% half-yearly bond six years ago. The bond currently sells for 96.1% of its face value. The firm's tax rate is 22.5%. A) Using the above information only, find Planet Express's pre-tax cost of debt? % per annum compounded annually (Round your answer to two decimal places) Suppose the book value of the above Planet Express coupon bond issue is $95.0 million. In addition, the company has a second debt issue, a zero-coupon bond with eight years left to matunty, the book value of this issue is $65.0 million, and it sells for 44.8% of par. B) Find the yield on Planet Express's zero-coupon bond as an EAR. % (Round your answer to two decimal places) C) Given all of the above information, what is the overall pre-tax cost of debt for Planet Express now? % (Round your answer to two decimal places) Assume that Planet Express has common equity with a cost of 16.3% per annum and a market value of $90.0 million In addition assume that they have a preference share issue with a cost of 12.7% per annum and that trades for a market value of $18.0 million D) Find the WACC for Planet Express (assuming they operate under a classical taxation system) % (Round your answer to two decimal places) Check
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