quiz5--4YTM+1(1) - ill make the present value of interest...

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Coupon interest 20 quarterly Price 900.90 105% of value value is the current price Face Value 1,000 Periods to Maturity 100 quarters YTM 9.00% After tax cost 5.40% The component cost of debt is the after tax YTM on the existing debt. The YTM is the discounting rate that w The after tax cost of debt is YTM X (1-tax rate) = 9%X(1-0.4) = 5.40%
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Unformatted text preview: ill make the present value of interest and principal equal to the price. We can find the YTM either using the RATE function in excel or a financial calculator. Using excel the YTM comes to 9.00%...
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This note was uploaded on 12/30/2010 for the course FIN 5405 taught by Professor Tapley during the Spring '08 term at University of Florida.

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quiz5--4YTM+1(1) - ill make the present value of interest...

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