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Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return.
Assume an 8 percent coupon rate. What effect does changing the coupon rate have on the firm's after-tax cost of capital?
Why is there a change?
Computation of effective duration of a bond for change in interest rates and Calculate the effective convexity to a 100 basis point change of the bond
Define preferred stock and explain why is preferred stock considered a hybrid security determine when should a company fund with preferred stock instead of common stock or debt.
Suppose the below Consolidated Statement of Operations for the year ending September 25, 2009 and answer the following questions.
A financial analyst calculate that the after-tax salvage value for amachine was $10,200. The current book value of the asset is $12,000 and the firm's rate is 30%. How much could the machine be sold for today?
Your organization has been asked to invest in a continuing care retirement center. Your investment will be $600,000 per year for the next five years. After five years, cash flows will be $400,000 per year for the next 12 years.
Global Technology's capital structure is given below, The after tax cost of debt is 6.5%; the cost of preferred stock is 10%; and the cost of common equity is 13.5%.
Suppose the capital-asset-pricing model holds. Based on the CAPM, what is the risk-free rate? What is the expected return on the market portfolio?
What is the importance of pay structure and administration satisfaction in workplace?
A stock expects to pay it's first ever dividend of $1 five years from today. From that point onward, dividends are expected to grow by 10% per year forever. What is the fair price for this stock if it has a required return of 14%?
Cull Incorporated recently borrowed $250,000 from Century Bank when the prime rate was 4%. The loan was for 90 days with interest to be paid at the end of the period with a rate fixed at 1.5% above the prime rate.
Find out an estimate of the risk-free rate of interest, krf. To obtain this value, go to Bloomberg.com and use the U.S 10 year treasury bond rate as the risk free rate.
Compute the implicit cost of carrying an ounce of gold and the implied storage cost per ounce of gold if the current spot price of gold per ounce is $425.00,
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