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Scandal Inc., plans to issue $5 million of bonds with a coupon rate of 8 percent and 15 years to maturity. The current market interest rates on these bonds are 7 percent. In one year, the interest rate on the bonds will be either 12 percent or 4 percent with equal probability. Assume investors are risk-neutral.
a. If the bonds are noncallable, what is the price of the bonds today? Assume a par value of $1,000 and semiannual payments. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Price of Bonds: $________
b. If the bonds are callable one year from today at $1,050, will their price be greater or less than the price you computed in part a?
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Please develop a classroom lecture for Strategic Thinking. This type of thinking employs the principles of Vision, Values and Mission. that details each of these principles, and notes how each affects a person’s leadership style.
The Digby's balance sheet has $119,413,000 in equity. Further, the company is expecting $3,000,000 in net income next year. Assuming no dividends are paid and no stock is issued, what would their Book Value be next year?
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