0
Why is the coupon rate a bad estimate of a firm's cost of debt?
Wiki User
∙ 10y ago
A coupon rate is not a good estimate of a firm's cost of debt, as it is only a reflection of the firm's cost of debt when bonds were issued, not the current cost of debt. It's not representative of the yield in the current market.
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
Where can one get a business debt consolidation?
Business debt consolidations can be found in several places. The primary place they are found are in business debt consolidation firms as well as business management firms.
The debt ratio is a measure of a firms what?
Leverage
What do firms owe their creditors?
Firms will owe their creditors a debt and usually some type of interest.
How does the cost of debt differ from the cost of capital?
Cost of debt considers only the cost that goes to the debtholders. Cost of capital considers debt and equity costs both.
The owners of a firm face unlimited liability for the firms debt in?
Both a proprietorship and a partnership.
Why does the weighted average cost of capital of firms that uses more debt capital lower that that of a firm that uses less debt capital?
Because the cost of debt is generally lower than the cost of equity. This is because in case of financial distress, debt-holders are repaid before the equity holders are, as well as because debt has the assets of the firm as collateral and equity does not.
Are debt collectors ever law firms?
Yes, many are law firms.
Where can one get a business debt consolidation?
Business debt consolidations can be found in several places. The primary place they are found are in business debt consolidation firms as well as business management firms.
The debt ratio is a measure of a firms what?
Leverage
Is it better to use book value versus market values of debt and equity rather than book values to calculate a firms Weighted Average Cost of Capital?
HIII. I am taking accounting and in my opinion market values of debt is way better to calculate a firms weight average cost of capital... hope i helped even just a little
What do firms owe their creditors?
Firms will owe their creditors a debt and usually some type of interest.
20 year debt issued a year ago par value coupon rate 8 percent paid annually Today the debt is selling for 1050 The firm's tax bracket is 35 percent what is it after tax cost of debt?
To calculate the after-tax cost of debt, we need to consider the tax savings from the interest payments. First, calculate the tax shield by multiplying the coupon rate (8%) by the tax rate (35%): 8% * 35% = 2.8%. Next, subtract the tax shield from the coupon rate to get the after-tax cost of debt: 8% - 2.8% = 5.2%. Therefore, the after-tax cost of debt is 5.2%.
Which ratio measures the firms degree of indebtness?
debt ratio
Difference between cost of debt and marginal cost of debt?
Cost of debt is the original cost of borrowing including original interest rate Marginal cost of debt is new loan which extended from the previous one, the interest of which is called marginal cost of debt.
How does the cost of debt differ from the cost of capital?
Cost of debt considers only the cost that goes to the debtholders. Cost of capital considers debt and equity costs both.
What is the total debt of 1233837 and total assets of 2178990 what is the firms debt to equity ratio?
Debt equity ratio = total debt / total equity debt equity ratio = 1233837 / 2178990 * 100 Debt equity ratio = 56.64%
The owners of a firm face unlimited liability for the firms debt in?
Both a proprietorship and a partnership.
