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1. Little Oil Co. is offering a $1000 par bond with a 7% coupon. The bonds will mature in 15 years. If the current market rate for these kinds of bonds is 6% what will the bond sell for? And is it sold at a discount or premium?
2. Happy Cruise lines issued bonds 5 years ago with par $1000 and a 20 year life when issued. At that time the coupon rate was 12%. Now 10 years later the current market rate for these bonds is only 10%. What should you pay for the bonds now?
3. Joan wants to buy a bond. The bond she is looking at has a par value of $1000 with an annual coupon rate of 10%. There are 5 years to maturity. The current market yield to maturity for these bonds is 12% annually. If the coupon is paid four times a year (quarterly) what should she pay for this bond?
What impact can a company's credit policy have on sales, bad debts and accounts receivable? Is it better for cash flow to have a tighter policy or more flexible policy?
When we think of the US dollar as a possible candidate for a world currency and we realize that most of the oil sold anywhere involves transactions denominated in US dollars
a. Calculate the cost of equity using the DDM method. b. Calculate the cost of equity using the SML method. c. Why do you think your estimates in (a) and (b) are so different?
Suppose your company needs $35 million to build a new assembly line. Your target debt-equity ratio is .75. The flotation cost for new equity is 6 percent, but the flotation
Your account pays interest at 8 percent p.a. You deposit $ 10,154 in it today. You must have exactly $ 53,665 in the account at the end of two years. What should you do at t
Today, Bart Simpson sells an annual coupon $1,000 par value bond with a 8% coupon rate with 7 years left to maturity for $1,050. Bart bought this bond a year ago when the bo
1. Determine the NPV for discount rates between 1% to 5% with an increment of 1% (this is the opportunity cost of your money-say what you would get in a money market account
DL Trucking has a cost of equity of 14.4 percent and an unlevered cost of capital of 13 percent. The company has $20,000 in debt that is selling at par value. The levered va
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