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Mike has just paid $1,174 for a 5-year bond with a par value of $1,000 and a coupon rate of 9%.
a. What dollar amount of interest will he receive from this bond every six months? Explain or show work.
b. If market interest rates rise while Mike is holding the bond, will the market price of the bond rise or fall?
c. If the market price of this bond changes while Mike is holding it, will Mike's interest payments change? Explain.
d. Calculate the current yield on this bond, expressed as a percentage rounded to two decimal places.
Assume you borrowed $12,000 at the rate of 9% and must repay it in four equal installments at the end of each of the next four years. By how much would you reduce the amount you owe in the first year?
What is the best way for the Australian Firm to deal with the exchange exposure? Explain. Suppose a firm enters into a swap agreement with a swap dealer. Describe the nature of default risk faced by both parties.
CAPM and Valuation. You are considering acquiring a firm that you believe can generate expected cash flows of $10,000 a year forever. However, you recognize that those cash flows are uncertain.
Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 20x7 are as follows: Finished goods inventory at the end of December is 4,000 units. Ending finished goods are equal to 40% of next month's sales.
If you invest in CDs earning an interest rate of 9 percent, the interest is taxable in the 28 percent bracket, and inflation is 5 percent, Determine real rate of interest you receive after tax?
Of Sharpe's sales 10 percent is for cash, another 60% is collected in the month following sales, and 30% is collected in the second month following sales.
IF JAR Inc's 2008 TAXABLE INCOME WAS $85,000. AND IF 2009 TAXABLE LOSS IS $35,000, the TAX RATE 40% WOULD IT BE POSSIBLE TO UTILIZE THE TAXABLE LOSS FROM 2009 TO THE CORPORATION'S BENEFIT
A new machine can be purchased for $1,500,000. It will cost $45,000 to ship & $55,000 to fine tune the machine. The new machine will replace older version.
If a tax paying company went from zero debt to successively higher levels of debt, determine why would you expect its stock price to rise?
Briefly explain how the imputation tax system works in Australia by providing an example. Assume a 30% corporate tax rate and a 15% marginal tax rate for the investor.
Chicago Corporation purchases 1,000 shares of the preferred stock of Denver Corp. for $40 per share. In addition, Chicago pays another 1,000 in commissions.
Internationally diversified portfolios often have a lower rate of return and almost always have a higher level of portfolio risk than their domestic counterparts.
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