Question: Please help show how this is solved. I'm sure using excel will make this really easy. Thanks. The dollar cost of debt for Coval Consulting,
Please help show how this is solved. I'm sure using excel will make this really easy.
Thanks.
The dollar cost of debt for Coval Consulting, a U.S. research firm, is 7.4%. The firm faces a tax rate of 40% on all income, no matter where it is earned. Managers in the firm need to know its yen costof debt because they are considering a new bond issue in Tokyo to raise money for a new investment there. The risk-free rates on dollars and yen are r$ = 4% and rYen = 1.3% respectively. Coval Consulting is willing to assume that capital markets are internationally integrated and that its freecash flows are uncorrelated with the yen-dollar spot rate. What is Coval Consulting's after-tax cost of debt in yen?
The after-tax cost of debt in dollars is __%. (Round to two decimal places.)
The cost of equity is __ %. (Round to two decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
