Find the market value of the bonds, Corporate Finance

Pfizer Incorporated has 2 million shares of common stock, selling at $18 each. The β of the stock is 1.5, T-bill rate is 6%, and the expected return on the market is 12%. Pfizer also has $20 million (face amount) of bonds, with coupon 6%, which will mature after 8 years. The required rate of return for the bondholders is 10%. Find the market value of the bonds. The income tax rate of Pfizer is 40%. Find the WACC of Pfizer.

Answer: 12.27%

Posted Date: 3/8/2013 5:13:20 AM | Location : United States







Related Discussions:- Find the market value of the bonds, Assignment Help, Ask Question on Find the market value of the bonds, Get Answer, Expert's Help, Find the market value of the bonds Discussions

Write discussion on Find the market value of the bonds
Your posts are moderated
Related Questions
i) Differentiate between a revolver loan and a rollover and give an explanation of the syndicated loan in the Eurocurrency market? ii) Can onshore banking and offshore co exist

Question: (a) Define foreign exchange rate risk and the three different type of exchange rate risks. Illustrate the three types of risks with examples. (b) Identify and ou

differentiate between allocative efficiency and pricing efficiency

L has business assets worth $8 million and NOL carryovers of $1 million expiring in 14 years and of $2 million expiring in 15 years. 100% of L's stock is worth $10 million. The l

Based on its Net Present Value (NPV), should the following project be accepted?  Please assume a discount rate of 10%.

5. Produce a cash budget and determine the statement of external financing required for NSP Inc. for the months of December and January using the following information: • NSP Inc.

mystore retail has about $200 000 in credit sales each month.mystore factors all these invoices at a 5% fee.what is the effective annual (%) cost of this action?

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique. Your company is considering the constructio

You are the Executive Director for the brand new Burkina Faso field office of a U.S.- based not-for-profit organization called Paper for All that distributes academic resources fo

Problem: Firm 1 produces cars and the total cost of producing q cars is given as C(q) = 2q 2 + 5q. a) Assuming the ?rm operates in a perfectly competitive market. Write down th