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Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 15 years to maturity, and a coupon rate of 6.9 percent paid annually.
If the yield to maturity is 8.0 percent, what is the current price of the bond? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Current price €
Firm A and Firm B have debt–total asset ratios of 39 percent and 29 percent and returns on total assets of 10 percent and 15 percent, respectively. What is the return on equity for Firm A and Firm B?
Central Food Brokers is considering issuing a 20-year convertible bond that will be priced at its par value of $1,000 per bond. The bonds have a 12 percent annual coupon interest rate, and each bond could be converted into 30 shares of common stock. ..
B&B Inc. has a book value of debt of $500,000. The market value of debt is $550,000. Its pre-tax cost of debt is 10%, and its beta is equal to 2. The tax rate is 40%. The firm has an annual EBIT of $200,000. What is B&B’s weighted average cost of cap..
Also choose examples from your own experience or find appropriate cases on the web that you can discuss. Credit will be given for references you make to relevant examples from real companies
What does it mean for an equity market to be integrated or segmented from the world capital market?
You are given the following information for Huntington Power Co. Assume the company’s tax rate is 38 percent. Debt: 10,000 6.5 percent coupon bonds outstanding, $1,000 par value, 30 years to maturity, selling for 108 percent of par; the bonds make se..
Suppose a bond has a term of 17 years with annual coupons. The bond has a face value of 508 and a redemption value of 494. The bond may be called at any time on or after the 9th coupon payment. The price paid for the bond is 476. The minimum yield r..
You are going to pay $800 into an account at the beginning of each of 20 years. The account will then be left to compound for an additional 20 years. At the end of the 41st year you will begin receiving a perpetuity from the account. If the account p..
Using the capitalized earnings method (EPS/RS), compute the estimated share values associated with each of the capital structures. Select the optimal capital structure on the basis of: Maximization of expected earnings per share.
An investment banker has recommended a $100,000 portfolio containing assets B, D, and F. $20,000 will be invested in asset B, with a beta of 1.5; $50,000 will be invested in asset D, with a beta of 2.0; and $30,000 will be invested in asset F, with a..
A project has an initial cost of $41,125, expected net cash inflows of $12,000 per year for 9 years, and a cost of capital of 14%. What is the project's NPV?
How much will Sarah have to invest today? If she earned an annual return of 18%, how soon could she then retire?
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