Reference no: EM131332079
Shanken Corp. issued a 25-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. The book value of the debt issue is $45 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 13 years left to maturity; the book value of this issue is $45 million and the bonds sell for 53 percent of par. The company’s tax rate is 35 percent.
What is the company's total book value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Total book value $
What is the company's total market value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Total market value $
What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Cost of debt %
What will the cash flows for this project be
: You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $50,000. The truck falls into the MACRS 3-year class(1 yr 33.33%2 yr 44.45% 3 yr 14.81%) , and it will be sold after three ye..
|
Coupon bond could trade for an amount above its par value
: if the coupon bond is selling at par, it's current yield equals its yield to maturity. if rates fall after its issue, a zero coupon bond could trade for an amount above its par value. a zero coupon bonds current yield is equal to its yield to maturit..
|
Why are the cash flows of a purely domestic firm
: Exposure of Domestic Firms: Why are the cash flows of a purely domestic firm exposed to exchange rate fluctuation? Are purely domestic firms subject to transaction exposure, translation exposure, and economic exposure?
|
Important to understanding the financial statements
: For fun, locate the notes to the financial statements located in the annual report of any company you choose. Tell us something unusual or important you found there. Why did you pick it or why do you think it may be important to understanding the fin..
|
What is your best estimate of aftertax cost of debt
: Shanken Corp. issued a 25-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. The book value of the debt issue is $45 million. The company’s tax rate is 35 percent. What is the company's total book ..
|
Predict few years of dividends before buying
: You are looking at a new stock and would like to predict a few years of dividends before buying it. The company recently had a dividend of $1. For the next 3 years, dividends will grow 4% each year, 6% the following year and a constant growth every y..
|
What is the firm market value capital structure
: Titan Mining Corporation has 8.3 million shares of common stock outstanding and 270,000 5 percent semiannual bonds outstanding, par value $1,000 each. What is the firm's market value capital structure?
|
The system will be depreciated straight-line to zero
: Your firm is contemplating the purchase of a new $745,500 computer-based order entry system. The system will be depreciated straight-line to zero over its seven-year life. It will be worth $45,000 at the end of that time. Suppose your required return..
|
Consider a biotechnology firm
: Consider a biotechnology firm, which has no cash flow-producing assets currently but has one product in the pipeline that has much promise in providing a treatment for diabetes. The product has not been approved by the FDA, and, even if approved, it ..
|