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Mullet technologies whether or not to refund a $75 million, 12 % coupon, 30-year bond issue that was sold 5 years ago. It is amortization $5 million of flotation cost of the 12 % bonds over the issue's 30 year life. Mullet's investment banks could sell a new 25-year issue at an interest rate of 10% in today's market. Neither they nor Mullet's management have anticipate will fall below 10% any time soon, but there is a chance that the interest will increase. A call premium of 12% would require retire old bonds and flotation cost on the new issue amount to $5 million. Mullet's marginal federal-plus state tax rate is 40%. The new bonds would be issued 1 month before the old bonds are called, with proceeds being invested in short term government securities returning 6% annually during the interim period. A. Perform a complete bond refund analysis. What is the bond refunding's NPV ?
If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default..
Given that many multinationals based in many countries have much greater sales outside their domestic markets than within them, what is the particular relevance of their domestic currency?
What is the equipment's after-tax salvage value? Round your answer to the nearest cent.
Computation of net present value with given data and What is its net present value
You need $23,956 at the end of nine years, and your only investment outlet is a 7 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year.
The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Percy's CFO estimates that the company's WACC is 9.96%. What is Percy's cost of common equity?
The stated interest rate on the borrowed funds is 10%. What is the effective annual rate of interest on the line of credit?
If the economy booms, RTF, Inc. stock is expected to return 11 percent. If the economy goes into a recessionary period, then RTF is expected to only return 5 percent.
MZC Ltd draws $2,000,000 in 180-day BABs at the current market rate of 7.0 percent per annum What proceeds will the firm receive from discounting the bill if the bank charges an acceptance fee of 1.5 percent?
General Eclectic Company is planning three possible capital investment projects. The projected returns depend on the future state of the economy as given here.
Jacqui Velasquez, a treasury assistant, is considering the purchase of municipal notes but needs to compare their tax-advantaged yield with the yield on taxable securities. The company's marginal federal tax rate is 34 percent.
Assuming you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpetto's cost of common equity? Round your answer to two decimal places.
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