Total real return on investment

Assignment Help Financial Management

Reference no: EM13937164

You bought one of Rocky Mountain Manufacturing Co.’s 8.5 percent coupon bonds one year ago for $1,046.30. These bonds make annual payments and mature eleven years from now. Suppose that you decide to sell your bonds today, when the required return on the bonds is 8.00 percent.

Required:

If the inflation rate was 3.7 percent over the past year, what would be your total real return on investment? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Total real return on investment %

Reference no: EM13937164

Questions Cloud

Proposed new investment has projected sales : A proposed new investment has projected sales of $828,000. Variable costs are 54 percent of sales, and fixed costs are $187,180; depreciation is $92,500. Assume a tax rate of 35 percent. Required: What is the projected net income?

Asset qualifies as a seven-year recovery asset : Genetic Insights Co. purchases an asset for $16,628. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, r..

Make the forecasts about the returns of stock : You make the following forecasts about the returns of a stock: in a recession (probability 40%) the stock's return is -6%, in a boom (probability 60%) the stock's return is 10%. What is the expected return for this stock? Total investment in stock A ..

Total real return on investment : You bought one of Rocky Mountain Manufacturing Co.’s 8.5 percent coupon bonds one year ago for $1,046.30. These bonds make annual payments and mature eleven years from now. If the inflation rate was 3.7 percent over the past year, what would be your ..

Level of debt increases that tax benefits of debt increase : As the level of debt increases that tax benefits of debt increase until. Which of the following would increase a firm's financial leverage? Leverage can __________ a firm's expected earnings per share, but by doing so it is not necessary that it wil..

Differences between a micro hedge and a macro hedge : What are the differences between a micro hedge and a macro hedge for an FI? Why is it generally more efficient for FIs to employ a macro hedge than a series of micro hedges?

Expansion project-requires initial fixed asset investment : Cochrane, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2,430,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worth..

The process of evaluating firms operations : The process of evaluating a firm's operations to determine the minimum volume it must sell to avoid losing money is referred to as: The degree of financial leverage is measured by relating the percentage change in earnings per share to the percentage..

User Account

All Pages