fin 305 ch 11 q 6 This has two question please answer both and the problems are
ID: 2717739 • Letter: F
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fin 305 ch 11 q 6 This has two question please answer both and the problems are not related
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PDQ, Inc., expects EBIT to be approximately $11.1 million per year for the foreseeable future, and it has 40,000 20-year, 10 percent annual coupon bonds outstanding. (Use Table 11.1)
What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.)
%
What would the appropriate tax rate be for use in the calculation of the debt component of PDQ’s WACC? (Round your answer to 2 decimal places.)
Explanation / Answer
2.The tax rate to be used is 35%.
Particulars Amount Amount Cash flows from operating activites: Net income for the year 56500 Add: Depreciation 15000 Amortization of discount on bonds payable 2000 Total adjustments 17000 Net cash flows from operating activities 73500Related Questions
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